Globally, rising inflation, a higher cost of living, and slower wage growth are impacting the lives of people right around the world.
A recent report suggested that many consumers are turning to physical cash to help manage their finances amid the cost-of-living crisis.
But Muhannad Ebwini, founder and CEO of MasterCard-backed HyperPay, believes that Fintech solutions are better equipped for dealing with this issue.
He argues that the diverse range of fintech solutions available on the market today, including loans, credit cards and buy-now-pay-later solutions, provide greater purchasing power and personalized support in the event of emergencies.
In an interview with Crowdfund Insider, Muhannad shared insights on how consumers can use fintech solutions to improve their finances during these difficult times. He also discussed the steps fintech companies can take to help those hardest hit by the cost-of-living crisis.
Our conversation with Muhannad Ebwini is shared below.
Crowdfund Insider: What are the benefits of using a cashless payments system?
Muhannad Ebwini: Cashless payments are payments made without cash, so it’s pretty self-explanatory. They’re essentially digital transactions –including credit or debit card payments, POS terminals, bank transfers, mobile payments and so forth. In a cashless payment system, you set up a financial ecosystem without any need for a third party, and the data is collected and managed within the system itself comprising the buyer and seller.
Crowdfund Insider: What are the use cases of cashless payments for businesses?
Muhannad Ebwini: Well, the most common one uses POS terminals, followed by contactless card payments. You could also get paid directly on your business app, through a QR code or a mobile wallet, and of course, go back to an old business favorite, gift cards and vouchers.
The possibilities are seemingly endless and that’s a good thing! This is one situation where option paralysis is not an issue. Businesses should quickly learn what works for them and their customers and provide the payment options that work.
What are the advantages of cashless payments for both businesses and their customers?
Muhannad Ebwini: By going cashless, a business can increase safety and efficiency, while ensuring both employee and customer compliance and transparency. Cashless payments can improve the customer experience by increasing accuracy, speed, and versatility, so more customers can be served in a short period of time and the business can make more sales at the same time, boosting profits and cutting costs. They are beneficial to both parties: the business can get to know customers better, by analyzing individualized data, and the customer in turn has a smoother, safer experience. Cashless transactions help eliminate user error.
For example, paper bills can stick together and a cashier can think they’re giving a customer a $20 bill. Let’s say that bill sticks to another one and all of a sudden that cashier is giving the customer $40. That’s $20 in shrink that could easily be avoided.
Small businesses can benefit from going cashless, especially. Large corporations can afford to hire loss prevention teams, cybersecurity specialists, and other professionals to help reduce shrink. Smaller entities don’t have the same luxury. However, going cashless means, you get the largest banks in the world fighting to keep your—and your customers’—funds safe.
Another benefit is the ability to exchange funds and not be in the same room or even in the same country. This puts a lot of power in the business owner and customer’s hands alike. It means you can take your business online and sell goods and services to people who need them. We’ve seen small t-shirt printers make their designs available to anyone with an internet connection and even barber shops with online, pre-payment options. (This is great for customers who forget their wallets sometimes.)
Crowdfund Insider: What are the cons of cashless payments for businesses and customers?
Muhannad Ebwini: Like with any transaction, cashless payments do have some drawbacks. For example, you may alienate some customers if your business is completely cashless. Some people simply prefer to pay with cash. However, it seems as though fewer and fewer people prefer to carry cash, especially with prepaid debit cards readily available.
You must also inform your customers of how to pay as soon as they enter a brick-and-mortar establishment. Otherwise, you may have some angry people when they go to check out and you don’t accept their paper money.
Cashless payments can also come with fees. However, those fees are often much less than the costs associated with cash. Cash costs anywhere from about five percent to 15 percent, whereas cashless transactions cost an average of 3.5 percent.
Another con is the possibility of opening yourself up to security risks. Although breaches do happen, they are extremely rare, and financial institutions work around the clock to help ensure your money is safe. Ironically, cash is less secure. With cash, you have a much greater possibility of internal and external theft and loss. Cashless transactions mean nobody can lose the night’s bank deposit. Cashless transactions mean you don’t have to hire an armored truck to transport cash to the bank–the money is already there.
Crowdfund Insider: What should businesses know when choosing a cashless payments system provider?
Muhannad Ebwini: It’s important for a business to measure metrics periodically and keep up with technology trends and updates. By maintaining a close and personal connection with merchants and clients, businesses can make customer-centric decisions and employ methods like rewards systems and referral programs in order to build clients’ loyalty. This means cashless payment systems lead to repeat business. And, as anyone who runs a business knows, it costs five times more to attract a new customer than it is to retain an existing one.
Before you pull the trigger on a provider, assess your own needs, including your budget and the services you want. Then find the one that can best suit them. Regardless of your needs, the cashless payments system provider you choose should provide ample training, have excellent customer service, and value clear two-way communication. One extremely important component of their customer service is the ability to quickly respond to requests and emergencies. You should feel like the provider has your best interests in mind. They should feel like a partner.
Another consideration is the cashless payment provider’s adaptability. Your business needs can and will change. The provider should be able to accommodate them. If not, it may be time to move on.
Crowdfund Insider: What advice would you provide to businesses implementing a cashless payments system?
Muhannad Ebwini: You need to be able to trust your payment solution company of choice – that’s the first step. Partner with someone who can guarantee a safe, reliable, and secure service and, ideally someone who knows everything there is to know about new technologies, solutions, and methods, so you can have one less thing on your business plate and let them do what they do best, giving you time to do what you do best–serve your customers.