Yoco’s Yusuf Shaikh reflects on the trend of going cashless, as well as the benefits and possible drawbacks for small businesses.
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SIMON BROWN: I’m chatting with Yusuf Shaikh, strategy associate for Yoko. Yusef, I appreciate the time today. Going cashless – certainly there’s been the social media hype and we’ll get to that in a second. But cash really is kind of fading. the pandemic speeded it up. Technology really is the big change here.
YUSUF SHAIKH: Hundred percent, Simon. I think there are two important trends that we need to acknowledge. One is sort of a macro trend, something that’s happening across the world, and then the second is something that’s more South Africa specific.
Generally we are seeing the world moving towards digital money. So moving away from handling and using physical cash to run transactions, and away from all of the systems, things like cheques, to things that are fully electronic, whether it’s the card that you have physically, or the Apple Pay or the Google Pay or the Scan to Pay that you use on your phone.
So it’s really driven by the customer, the technology that’s become available to them, and their seeing that as a more convenient way to transact.
On the other side, which is also very much more South Africa-specific, we are seeing – and this is not something that’s recent, it’s something that’s been ongoing – the risk around using cash.
Think about any small business. They need to accept cash from their customers, cash it up every day, take it to the bank. The bank needs to deposit it. Or if you’re a larger business you have a cash-in-transit vehicle that comes and picks up your cash. There is the spate of cash-in-transit incidents that have happened, as well as just the general risk of walking to the bank or driving to the bank with cash in your car posing a general risk for business.
So we see these two trends sort of intersecting and businesses like the ones we’ve seen on social media choosing to go the cashless route, because it’s meeting the customer where the customer is at, but it’s also mitigating some real risks that businesses face in South Africa.
SIMON BROWN: Those risks are real, and of course they’re an expense at the same time. You mentioned cheques – and of course I had completely forgotten about cheques.
But for the small businesses, the retailers, [going cashless] is a big boon for them. It simplifies life. If I’m at, I don’t know, the local market, I don’t need to have a float. A lot of my listeners are [thinking] what the heck is a ‘float’? That was change. It’s that sort of thing. It really does make the process so much easier and so much more seamless.
YUSUF SHAIKH: A hundred percent. Let’s just double down a little on the float question. I can speak to this anecdotally. In junior school I had market day. The day before I had to go to some small shops, take hundred rand notes, split them up into two rands, one rands and five rands so I had change for the next day. I assume kids of today, if they had their market day would have a card machine and it would simplify [transactions].
But that principle doesn’t apply to small businesses or sort of a hobbyist. It applies to your weekend markets, exactly that. On the one side, moving your money over into a digital way to transact is one part of the equation.
The other part of the equation is you have much deeper insight in terms of how you received your money. So when everything’s electronic, you can track it against the product that you sold or the time that you sold something. This is where small businesses have seen the benefit beyond just the transaction; they’re seeing the data behind it. They’re seeing this product sells better than that one. This is more of a peak time for me than another time. This is probably a time where I need some extra staff in my store, compared to another time in my day where my transactions take a bit of a drop.
So yes, it’s the convenience, it’s the safety, but it has also added this huge layer of insight that businesses previously weren’t able to easily infer if they were just using cash.
SIMON BROWN: It’s even a benefit to me. I bought something recently and they sent me a digital electronic email receipt, and when I was prepping for this, I typed Yoko into my Gmail, and there pops up the receipt. I’ve got it there digitally.
But there has been pushback. Thinking particularly about Woolies, it turned out it was Woolies Cafe, not the Woolies clothing or food. But my sense was that was probably more social media than reality.
YUSUF SHAIKH: I think in principle consumers or people on social media are seeing the trend, the move towards cashless. And even though it may have just been the café, or it is just the cafe, I think they’re seeing that as a sign of things to come in the future.
Of course there are people who are still heavily dependent on cash. And there are subsegments in the economy, there are people who come over into South Africa or currently don’t have bank accounts, who can’t easily open bank accounts and transact, and who have cash. There are people who, out of no control of their own, get paid in cash by their employers. They may be contract workers or they may not be working on a normal salary basis.
So I think there are certain subsegments of customers, consumers who work on this cash basis who almost see this as them being sidelined by some businesses, and they’re seeing this as, hey, if it starts with one sector, it’s probably going to expand into others.
But I think the important thing to consider is that for this specific example that we saw with Woolworths Cafe, they’re starting with their coffee shop. I think the whole idea is let’s look at one specific segment of my business, see how well the move over to cashless goes. Does it really affect my sales? Am I losing 20%, 30% of sales? And then to reconsider the decision against the risks that I would usually face if I had cash.
I think that’s probably the thinking that’s going to be going on in a lot of business owners’ minds. If I remove the ability to accept cash, what risk am I removing versus what benefit am I getting? It’s just managing that.
SIMON BROWN: Yes, and I think it’s a difference, perhaps, of Woolies versus maybe a Usave. It’s going to be situation-specific as much as anything else.
We’ll leave it there. Yusef Shaikh, strategy associate for Yoko, I always appreciate the time.
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