Financial inclusion needed before transitioning to cashless economy
ACI Worldwide recently launched an app designed to help its users make online payments with cash. But due to the platform’s limitations, it may hinder rather than benefit its targeted audience. GlobalData analyst, Chris Dinga, writes
In previous years, the use of cash as a payment method has been gradually declining. According to the Global Payments Report by Worldpay, this decline was accelerated in 2020 due to the pandemic and is expected continue, potentially until cash eventually disappears.
The Access to Cash Review estimated that in the UK, eight million people would struggle to operate in a fully cashless society. While we are transitioning to a “cashless society”, it is important that we find solutions to help the most vulnerable adopt alternative means of payments.
Millions of people are unable to participate in the digital economy. Some are excluded because they are unable to open bank accounts and thus unable to make card and online payments.
A solution that could help them is ACI Worldwide’s new payment system, which digitises cash payments. ACI Worldwide and its partner InComm launched a platform called VanillaDirect Pay that will allow cash-based consumers to digitise their cash payments using a barcode payment token, which can be used by participating retailers.
This should give consumers the opportunity to make “cash” payments to platforms that usually only accept online payments.
The IRS announced that this solution will be available to American taxpayers. Approved taxpayers will receive a barcode token of their taxes through ACI’s app and pay them in cash at one of the retailers that support this service.
Despite ACI’s intention to serve the unbanked and underbanked, this technology has limitations that could prevent its adoption by the people it aims to help. For them to use it, users need to be technologically literate and financially astute.
This is unfortunately not the case for the elderly, a demographic that is struggling to transition from cash payments to alternative payments. To successfully include the elderly on the platform, they would ned to receive some financial and technical training.
Another issue with this platform is that it relies on access to cash, but with an increasing number of cash machines being closed, this will become increasingly difficult.
Which? Research found that in the past three years, the number of ATMs in the UK dropped by almost 20%. While more cash machines are expected to be removed, access to cash needs to be maintained in order to support the people who depend on it until a digital solution can be used to include them.
The adoption of a cashless economy is inevitable, but for this new economy to work, we will need to put in place solutions to include members of society who are at risk of being excluded.
ACI’s solution is a workaround approach to a problem that needs an overall review – technology is only part of a solution that must also include the education of consumers and a system that allows all consumers to access payments regardless of their circumstances.