Western Union’s Playbook For Balancing Cash And Digital Payments

Despite the dreams and expectations among all kinds of people during the rise of eCommerce and digital payments, cash isn’t really going away. Sure, one may find numerous instances and specific markets in which cash use has given way to payment cards or mobile wallets, but, for various reasons, physical coins and bills endure, and will likely do so for quite some time.

However, the role of cash in the growing and developing global ecosystem of payments is becoming more complex, with cash often working in tandem, so to speak, with digital technology to better tie together senders and receivers of money — and to enable better omnichannel and peer-to-peer (P2P) payment experiences. In a new PYMNTS interview, Odilon Almeida, Western Union’s president of global money transfer, took Karen Webster on what amounted to a global tour of those efforts to better understand how this part of payments is evolving and innovating.

Need For Cash

The need for cash in remittances depends on a consumer’s particular “use case,” he said, and “I don’t think that will go away.” After all, people around the globe continue to go about their daily lives without the benefits of bank accounts, payment cards or reliable access to digital payment services. As the global population continues to expand, the use of cash might level off, but seems unlikely to drop significantly — at least, in the general sense. For “people without disposable income, there is no rationale for them to be included in traditional financial systems,” he added.

At the same time, digital payment options are continuing to be developed and introduced into markets around the world, often reflecting local payment options.

With that in mind, Western Union is in the midst of working with other companies to build omnichannel and global P2P offerings that combine cash and digital processes. The goal is to enable more payment options for consumers around the world.

One big example of that came in April via the launch of an exclusive partnership between Western Union and discount retail chain Dollar General. Consumers can initiate international and domestic money transfers digitally through the Western Union mobile app or website, then pay in person at Dollar General stores. They can also receive money transfers in Dollar General stores, where senders have 12 hours to settle their accounts.

The deal with Western Union follows another program, announced last month, that enables international Amazon customers to pay in their respective countries’ currencies. The Western Union service works in conjunction with Amazon’s cross-border payments option, Amazon PayCode.

Furthermore, late last year, Western Union and M-PESA announced a global P2P partnership that will make it easier for M-PESA customers to send money outside of Kenya, helping this highly popular mobile payments platform to scale globally.

Replacing Cards

During the discussion with Webster, Almeida said those efforts are going well, but offered no specifics. However, he did put those efforts into context — that is, the push for omnichannel payment services, one that enables customers to use cash and digital when circumstances call for them.

The Kenya M-PESA development was a strong example of what one might call the subtleties involved in this cash-and-digital world of money transfers, as Almeida explained. “In this case, they are not replacing cash; they are replacing cards,” he said. “The need for cash continues to remain the same.”

Mobile wallets, too, face some complex circumstances that depend on markets — circumstances that help govern how remittances are done. Those wallets tend to be more popular “in countries where debit and credit cards are not well-developed,” Almeida noted. Merchants and other players also face costs for accepting mobile wallets, another factor at play when talking about moving back and forth from cash to digital.

FinTech Challenges

A company such as Western Union — a long-standing, major player in the global payments space — faces potential challenges from upstart FinTech firms bent on bringing innovative digital services to markets around the world. However, Almeida explained, many, if not most, of those FinTech companies can’t really be considered “long-term players,” given the challenges they face in scaling their businesses, and in forming relationships with financial institutions and other participants in the payments ecosystem. Venture capitalists have limited patience, too.

Still, that doesn’t excuse the veteran payment companies from the need to innovate, either through new products or partnerships. When asked about where the next wave (or waves) of Western Union experimentation might come from, Almeida pointed to “our alliances with mobile companies around the globe, which is working very well in the markets we launched,” though he declined to provide more specifics.

Even so, the need for cash endures — and that will hold true for the foreseeable future, even in markets and countries where digital is becoming a bigger part of the overall payments mix. The key? “Giving consumers the option of going digital if they want to,” he said.