The Great Online E-Commerce Mystery.

Is cash the next big thing?

What is cash these days ?

All have benefits, and risk. Cash really doesn’t mean greenbacks but electronic payment non-credit card in origin
PayPal- Is PayPal cash? in an online world, PayPal can be better than cash in that a buyer can PayPal via  cash or credit card per transaction allowing you to micromanage every transaction. PayPal in turn they take 3-4% per transaction. But the funds are secure for buyers and sellers, used on eBay and privately around the world. It creates an escrow buffer at the same time protecting buyers and sellers instantly.  A buyer can have products or service released by a seller immediately and a seller is protected once PayPal notifies them.
EFT- Electronic Transfer, usually able to be done via a bank online, allows anyone to pay direct to a person or business, allowing instant payment. No escrow is used so there is some risk for the buyer.
Cheque- amazing to think now many of the Y-Gen folks will never see a chequebook. For the rest of us this can be personal cheque or for global purchases a bank cheque, and often can be ordered from a bank online, sent direct to a seller from a buyer. No escrow protection again and slower processing time. However the cheque is traceable.
eWallet – Being rolled out around the globe, like PayPal  but it offers users the additional ability to pay by mobile phone at shops and places in their communities.
vouchers- Apple iTunes, and vouchers for services like prepaid phones that can be purchased form shops and gas stations
Cash Credit Cards– Not to miss out banks around the globe are now selling cash credit cards, where you go to a 7-eleven and buy a credit card, that be topped up online, and can be offered like a normal credit card, offers no escrow security but allows cash users to use a something that is like a credit card in every other way

Why Cash and Who Cares?

There are loads of reasons cash appeal to folks, a hybrid like PayPal is also advantageous  as the seller doesn’t care how you pay PayPal and as a buyer I can micromanage if I use this account or that account , this credit card or that credit card per each and every transaction.

Then there is the cost of using credit cards, all companies pay to take a credit card into their business process. That cost is often hidden in the price but some will charge for more expensive cards like Diners and Amex..

Another reason is the current economic times where folks may have messed up their credit and may only be able to pay by cash.

Recently a woman in Chicago wanted to buy a new Apple iPad but had no credit card, apple said no, we only take credit card for payment. Hmm, a complaint and 3 later and apple reversed this across the globe, and increased their revenue.

Some time ago eBay that great online love it or hate it machine decided to force customers to use PayPal to pay for goods purchased on eBay (they own PayPal) and make around 3-4% per transaction.  Many hated this strong arm tactic many (myself included) took no notice as we had already embraced PayPal and cash.

Buying Habits and security– every time a credit card transaction is made and angel dies and your buying habits are logged and often shared around the world in an instant. Sometimes shared unwantedly and banks then have to issue new credit cards, an experience that is happening way too often these days and a pain to deal with.

More

Qantas airlines is a good example, they only started taking cash transaction pretty recently for flights across the globe. Funny enough you can buy flights with cash but not join their Qantas club but by good old plastic.

Others like scottevest that guru of hidden pocket clothing, says he sees no benefit to taking cash and it is too difficult, short-sighted I think.Others see cash as opening up a new demographic, e.g. iTunes can be used with a credit card, or vouchers (vouchers that are bought with cash).

Microsoft takes tens of thousands of dollars online for their software (that is only downloaded) and takes EFT.

China– In china many business wholesalers, manufacturers and alike are taking escrow and PayPal payments to make it easier to sell to the west. This is even for large purchases like cars, and computers.

The Banks– realizing they were missing out on the market banks per above are offering gift cards, that in every other way act like a credit card.

Not All online Businesses are Created Equal – it amazes me how many online businesses have not even considered cash. As an IT consultant and Product Manager, a few years back a company asked me to look to see how they could improve profitability, reduce customer churn and grow their business towards an IPO. The first thing I noticed is how long it took them to take payments for small recurring purchases, for tens of thousands of customers. Once they offered cash as  an option card (for monthly or annual payment), the cost per sale went down,  less  cancelled card issues, less credit card fees, and more cash flow as many customers chose to pay a year in advance to get a discount that we only partially shared with the customer.

Now What ?

A big issue is companies in some cases have been slow to react to their e-commerce requirements so enable cash payments for services.  For others cash really is the next big thing.