February 8, 2018

Changing the Payments Landscape for Posts: eMoney

Postal

Remember the Penny Black? For most of its history, postal transactions were cash based, as was most of society at the time.

Over the last few decades, the convenience and incentives offered by cards has encouraged us to gradually move away from cash as our default payment method.

Another change is now occurring as we increasingly use our phone (and devices) to pay for items, both online and office.

Consumers are becoming less reliant on cash, in particular in developed countries where digital payments are on the rise.

The evidence suggests that societies are becoming increasingly cashless. Sweden may be on track to become the first truly cashless society. Right now, 80% of all transactions made there are by cards. Digital payments via card or apps are so widely accepted that many Swedes no longer carry cash. Even children pay with debit cards.

For Posts, this shift poses significant challenges.

Unlike retailers, Posts are obliged to serve citizens and ensure they have easy access to postal and government services. While a minority, many traditional customers still prefer to pay with cash.

This means that while Posts diversify beyond their core business by creating digital platforms, they still need to accommodate a broad spectrum of customer needs in terms of payment options.

With this in mind, what’s the future role of cash in tomorrow’s world?

Future of Money

According to a recent U.S. Bank survey, 75% of respondents have less than $50 cash in their wallet. 25% have $10 or less. In 2016, MasterCard reported that Britons on average carried less than £5 in cash. At this rate, wallets and purses could soon be obsolete.

In the UK, debit cards have replaced cash as the most popular payment method. Last year, the British Retail Consortium’s (BRC) annual Payments Survey revealed that cards accounted for more than 50 per cent of all retail transactions by volume.

What’s driving this trend?

Two things: Ecommerce and mobile device usage.

Ecommerce offers convenience, choice, and exclusivity. Likewise, deliveries are now faster, more secure, and often free.

Consumers are increasingly turning to cards, phones, and devices (e.g. Amazon’s Alexa) to shop online, pay bills, transfers funds, and more.

This trend is likely to continue as consumers become more comfortable with payment products such as Apple Pay (using your phone to pay with your debit/credit cards), loyalty/reward apps, and Person-to-Person payments (Circle, PayPal, AliPay) to digitally transfer money.

Likewise, the rise of mobile devices has further accelerated mobile commerce. According to Statista, by 2019, mobile Ecommerce spending in the US is expected to surpass 1 trillion USD.

Digital Money

In the context of postal transactions, what does this mean for Posts?

Understanding payment trends is critical to address consumer expectations and develop the necessary products to support their future needs.

Indeed, the shift towards a digital economy offers Posts multiple opportunities to introduce new revenue-generating products to consolidate existing relationships, develop partnerships, while also attracting new consumers, especially among younger ‘digital natives’.

Today, Posts have an established position in our society as a trusted provider of payment distribution and financial services. As a total solutions provider to the Postal Industry, Escher helps Posts build upon this trusted position by delivering eMoney services that keep pace with consumer preferences for convenient payment methods.

Our eMoney solution facilitates cross-channel mobile payments on physical networks, such as postal outlets, retailers, agents, etc., and consumer mobile devices, while aligning with national legislation and regulatory frameworks. With multiple deployment options, it supports multiple points of service, and runs on any phone, tablet, branch, or outlet.

Digital Wallets

Soon, the traditional wallet could be redundant. Instead of struggling to find cash, the right loyalty card, or your credit card, we’re increasingly using our device to tap and pay.

Just like your physical wallet, a digital wallet (eWallet) lets you store, view, and top-up your account.

Instead of stuffing your wallet full of cards, you can store cards from national and local banks, store-branded cards, loyalty cards, and gift card numbers — on one single device.

From here, you can use the device to pay for bills, receive social welfare payments, make tax payments and perform other postal services.

In addition, you can use it for identity purposes; find branch locations, receive loyalty points, offers and coupons; redeem prepay, points, and coupons; make physical retail payments, in-app purchases, P2P payments, and international transfers, and more.

To load cash, the smartphone app displays an account-specific QR code, which contains account details. The post office or agent network simply scans the code to verify account details, then credits your account.

The eMoney concept extends beyond the Post’s network to authorized agents and third-party retail outlets. For example, Escher’s eMoney drives the Isle of Man Post Office MiCard system, which provides a card-based electronic eWallet. This delivers benefit payments on behalf the government in the Isle of Man.

eMoney also helps alleviate social exclusion by giving unbanked citizens access to financial services.

 

Give Consumers What They Want

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As we move into the future, Posts will need to offer an increasing number of payment choices to accommodate both existing and new consumers.

In addition, once The Internet of Things becomes mainstream, everyday devices will be connected to the internet, further opening the possibility to use devices to purchase goods and services. While we’re not there yet, it’s something to be aware of.

For sure, digital payments won’t replace traditional ones – yet.

But a digital economy is on the horizon. Every year more and more digital transactions, purchases, and interactions are made. And while some countries and demographics will take longer to replace cash, the shift is inexorable.

For Posts, the redefinition of the payments landscape offers both challenges and opportunities. Posts can capitalize on this opportunity by introducing products that reduce payment friction, and encourage more frequent visits to different point of services.

Finally, as the world becomes more mobile, developing an enhanced user experience across all channels is essential to drive engagement.

To prepare, Posts need to offer flexible payment methods that can be accessed at any point of service — just as consumers expect.

Do you want to find out more about how Posts can benefit from the transition to eMoney payments? Click the button below to learn more or to arrange a demo for our eMoney solution.

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