Can your business still afford to accept cash?

When we were told to stay at home in March of last year, I'm fairly certain most of us could never have imagined the extent of what we were about to experience.

But 2020 profoundly altered so many of our behaviours in a matter of mere weeks.

For us in the payments industry, COVID-19 catapulted a change that was expected to take several years.

Lockdowns, physical distancing and people seeking to limit contact with frequently touched items drove more consumers to shopping digitally and more businesses to offer digital payment options.

There is more to this story, however.

While concerns surrounding virus-caused restrictions have certainly pushed more shoppers to online and mobile channels, the shift hasn't proportionally translated to digital payments – signalling that merchants still have some catching up to do to succeed in the new retail landscape

Rising online shopping

According to the latest edition of the annual ASDA’A BCW Arab Youth Survey, today, most young Arabs (80 per cent) shop online, a steady growth over the past two years when only just over a half (53 per cent) said they shop on the Internet.

Yet 48 per cent of this population – the Middle East and North Africa (MENA) region’s largest demographic of more than 200 million – still pays using cash on delivery (COD), a minor decline from 50 per cent in 2019 and 53 percent in 2018.

Unfortunately, managing COD is a costly, complicated and inefficient endeavour for merchants and not all have the resources to take it on, especially small and medium-sized businesses.

From delays due to multiple delivery attempts, customers not having correct change, to the time it takes to receive the cash in your account, the process is slow and could mean your working capital is often reduced.

More than a COVID-trend

When customers have already paid online, the only thing left to do is deliver the product.

So even as more sellers show up on the internet to try and tap into the significantly growing number of customers, it may well prove counterproductive.

Merchants that want to capture the dramatically expanding e-commerce market simply cannot make the math work long term without the ability to transact online. They also need to have their fingers directly on the pulse of what consumers want from their digital offerings, particularly when it comes to developing user journeys that make shoppers feel more confident abandoning cash to pay online.

Digital payments aren't just a COVID trend and are here to stay long after the pandemic but for selling online to make economic sense for a business, digital payments acceptance is a must.

Nandan Mer, Group Chief Executive Officer, Network International.