Paysafe Group has introduced a cash-based online payment mechanism for people who don’t have bank accounts or don’t use cards online due to security concerns. The U.K.-based payments services provider is also expanding its presence in the U.S. processing market for small and medium-sized businesses.
Even in a mature e-commerce market, companies are still experimenting with ways to accept funds from consumers who prefer cash. Bigger brands can simply sell gift cards and prepaid cards in stores, but smaller sites don't have the means or the brand heft to do so. Cash may be a cumbersome alternative for online sellers, but for many shoppers it's the only option — The World Bank estimates that in 2017 around 1.7 billion adults worldwide were unbanked; in addition, even among many banked consumers there is still a preference for cash.
According to a survey of 5,056 consumers in the U.S, U.K., Canada, Germany and Austria conducted in Q2 2018 by Paysafe, 87 percent of respondents had used cash to make purchases in the previous month. Research by UK Finance, the payments association previously called Payments UK, indicates that despite the extensive usage of contactless payments in the U.K, 2.7 million U.K residents relied almost entirely on cash in 2016, spread evenly across different age groups.
In the online commerce area, there is a strong consumer preference for secure payment methods. Paysafe’s study found that 63 percent of consumers feel more comfortable purchasing online via payment options where their financial details aren’t shared. Also, 50 percent of survey respondents used a digital wallet for online purchases, compared to compared to 43 percent using credit cards and 33 percent using debit cards. In Austria and Germany, payment by invoice is more popular than card payments for online purchases, with invoice payments being used by 38 percent of Austrians and 29 percent of Germans, Paysafe said.
Paysafe's new cash payment service, called Paysafecash, can be used to upload funds into digital wallets, including Paysafe’s own Skrill and Neteller wallets. It allows consumers to pay the exact amount in online stores, instead of having to round up the amount to a fixed voucher denomination, typically the only cash option offered by online retailers.
When shoppers select “Paysafecash” in an online store, they load the QR code generated by the merchant to their digital wallet, and send the bar code to their mobile phone or print it out. Using the search function on www.paysafecash.com, they then find the nearest brick-and-mortar store that acts as a Paysafecash payment point. They get a sales person at the store to scan the QR code, and pay cash for the amount due. The online merchant processes their order directly after payment.
Paysafe is seeking distribution partners and online retailers to promote and accept Paysafecash.
“Paysafecash is live in 14 countries including Austria, Spain, Italy, Portugal, Hungary, the U.K. and Canada,” says Danny Chazonoff, Paysafe’s chief operating officer. “Plans are underway to extend its availability to an additional 32 markets, including the U.S., by the end of 2018. We’re targeting the travel and bill payments sectors, as well as the classic e-commerce markets with thousands of Web stores that are interested in this solution.”
Paysafe offers Paysafecard prepaid virtual cards which enable cash-preferred or cash-only consumers to pay online for purchases and downloads at e-commerce retailers and other websites using a 16-digit PIN. Consumers can purchase Paysafecards at Paysafe’s network of brick-and-mortar retailers, who also act as the distribution channel for Paysafecash.
In June 2018, Paysafe announced a deal with Google to enable Paysafecard users to make purchases in the Google Play Store using its virtual prepaid card. The international rollout of Paysafe's partnership with Google has begun in Poland, where Paysafe says more than one million people a year use Paysafecard.
Paysafecard is currently available in 46 countries and accepted in over 600,000 sales locations worldwide, of which 40,000 are located in Poland.
"Paysafecards are widely used for Internet purchases by people who don’t have other means of payment or want to transact without disclosing their financial information,” says Ron van Wezel, a senior analyst at Aite Group. “Paysafecash is positioned in the same space.”
This month, Paysafe completed its acquisition of iPayment Holdings, a U.S. payments processor for small and medium-sized businesses (SMB).
iPayment processed over $25 billion in 2017 from over 137,000 U.S. merchant clients. Combined with Paysafe’s August 2016 acquisition of U.S.-based SMB payments provider Merchant Choice Payment Solutions (MCPS), the acquisition establishes Paysafe as one of the top five non-bank, payment processors in the U.S., Paysafe said.
Chazonoff says there are considerable opportunities for payments processors in the U.S. small and medium-sized business market, which he describes as fast-growing and profitable.
“Paysafe’s acquisition of iPayment forms part of our strategy of scaling up our presence in North America in light of the growth opportunities we’ve identified across the region,” says Chazonoff. “Now that the acquisition has closed, the integration has started between the two firms, and our focus is to maximize best practices and synergies across Paysafe and iPayment to create a customer-centric omnichannel payments processor.”
Chazonoff said Paysafe’s acquisition of iPayment will enable the firm to cross-sell additional Paysafe products through the iPayment client set such as POS solutions, digital wallets, pay-later and prepaid cash solutions.
“The acquisition of iPayment is a sign of Paysafe’s dual strategy to expand in the U.S. market and play in the POS acquiring space,” says van Wezel. “The latter strategy is similar to Paypal’s and Stripe’s, companies which also have ambitions to become omnichannel providers rather than online only. This acquisition makes good sense for Paysafe, although it’s too early to predict its future success.”