For years, cash has been the undisputed king in Asia. At the start of the decade, cash made up nearly 100% of transactions in countries like India and China, and even in 2015, around 85% of transactions in South-East Asia were still being conducted in cash. But I believe the days of Cash’s reign are numbered – and that has some big implications for the way businesses in Asia handle their payments, expenses, and general finances.
The best evidence for this? Every time I travel to meet a customer or partner, I take Uber or Grab, often using their ride-sharing services like UberPool or GrabShare. I’ve noticed that most people whom I share a ride with, now pay for their rides by the card they’ve stored in the app. Far fewer people hand over cash nowadays. That’s very different to when both services launched in Singapore – at the time, many of my friends told me they were hesitant to store their credit card details in an app that might get hacked one day.
Part of my job at Concur is to partner closely with Uber, Grab, and other fin tech companies, and I’ve seen first-hand how they’ve eroded cash’s dominance. The promotion codes that Grab offers, for example, require users to pay by card, not cash. Grab has teamed up with banks like Citibank to offer discounts on rides for using specific cards. Both companies have done an admirable job in maintaining a spotless cyber security record, one that’s earned the gradual acceptance of the public.
These strategies appear to be working: the allure of convenience, coupled with ever-improving cyber security, has started to bring consumers around. Even more traditional banks are starting to offer digital wallets and other options that insulate our financial details from malice and fraud. As a result, people all over Asia are becoming more and more comfortable with cashless and mobile payments.
Prepare to do business, cashless : In his National Day Rally speech, Prime Minister Lee Hsien Loong laid emphasis to simplify and integrate electronic payment systems, in a bid to transform the country into a Smart Nation. For businesses in Asia, this should really encourage them to digitise how they handle their payments and expenses. Most businesses that I talk to already know that the costs of managing cash are big, but they still prefer it because of its perceived security. The more consumers shift to cashless transactions, however, the higher those management costs will get, and at a certain point, they’ll become too big to bear. It’s better to prepare for a cashless Asia now rather than later.
Investing in the infrastructure to accept cashless payments is an obvious priority. However, businesses shouldn’t forget about how they handle expenses and claims. Much of my work with fin-tech companies revolves around platform integration: making sure that expenses from apps like Uber and Grab, for example, flow seamlessly and automatically into Concur’s expense management system. Cashless transactions create opportunities to drastically slash the time and human error of traditional expense tracking.
Asian businesses should also start to rethink how they handle cash transactions. Even if it’s usurped by cards and mobile apps, cash still won’t go away entirely, and businesses will need more flexible and efficient policies for handling them. At Concur, we don’t require our people to keep physical receipts anymore – a digital copy snapped with our app will do just fine. For our customers who have to keep physical copies for compliance reasons, we often help them barcode those receipts so that when an audit comes, they can go directly from the Concur app to the right folder in their archives. As people get accustomed to the speed and convenience of cashless transactions, companies will need workarounds like these to provide a similar experience for cash.
A cashless Asia won’t come easy. There’s still much room for improvement in many cashless platforms. But from what I can see, both work closely with fin-tech partners and as a consumer in several Asian markets, the dominance of cash is on the decline. Better for businesses to prepare now than find themselves on the wrong side of the coin.
Sandeep Krishnamani is Head of Partnerships – SE Asia at Concur based in Singapore.