Adopting inclusive technologies
There is a way small businesses can bridge the gap between the perceived risk of engaging underbanked customers and the reward of reaching 60 million potential customers: by thinking more inclusively about the payment process.
Some large retailers are already rolling out the welcome mat to unbanked and underbanked people. Both Amazon and Wal-Mart now offer mechanisms (Amazon Cash and the Dotcom Store, respectively) for customers to pay at physical locations for products in their online stores. Smaller businesses can take advantage of these growing varieties of frictionless, discrete and convenient new ways to serve customers who lack banking accounts.
Unbanked and underbanked consumers have become creative in adapting non-bank-based forms of payment. The use of gift cards and prepaid debit cards for all kinds of transactions, for example, is on the rise. Mobile banking, widespread in countries like China, is also growing. Several major retail chains allow Sprint and T-Mobile customers to deposit cash into T-Mobile Money accounts, launched in 2019. The accounts even pay interest and issue debit cards. More and more large retailers are integrating third-party buy-now-pay-later services and lease-to-own options, both of which are portable between brick-and-mortar and online stores.
The pandemic has also prompted small, local businesses to accept new forms of payment. Close to four-fifths of the businesses using mobile payment systems such as Square are already brands with annual sales of less than $10 million. And increasing numbers now accept peer-to-peer payments through Venmo, Paypal or CashApp.
Given the flood of innovation taking place in this sphere, reaching a generation-sized market of underbanked and unbanked customers doesn’t require small businesses to take on more risk. What it does require is for businesses to think more inclusively.
It’s time to take a hard look at how we present barriers to people who manage their money outside traditional banks. Focus on adopting a more diverse set of inclusive technologies that, in turn, can help convert shoppers into customers and grow small businesses’ bottom lines in the process.