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Rethinking payroll with money transfer cash outs

November 11, 2020

Helen Whelan

Small business owners and employees face huge security risks and inconvenience when it comes to payroll. We believe that a revolutionary solution lies in money transfer cash-out partnerships between retailers and banks.

The cash economy still dominates in South Africa, especially within the lower-income groups. As reported by PASA, approximately 4 in 5 people with an income below R3000 per month, favour cash when making a purchase at a store. Without even exploring the rising cost of cash, this dependency on cash presents a challenge to small business owners, especially when they employ seasonal, unbanked, or informal workers.

The risks, and associated costs, of carrying cash for small business owners are very high. Paying regular wages in cash is a security risk for both the owner and their employees. The owner also has to spend time withdrawing cash from a bank, counting and checking the cash amounts, and paying their employees in person. If the owner opts for bank transfers instead, a significant amount of time is used to load all the bank details or cellphone numbers (provided they even exist) of temporary workers who might only need to be paid a couple of times.

According to Electrum’s estimations, approximately 5 million money transfer transactions a month take place in South Africa. Bulk money transfer vouchers can provide a simple and user-friendly solution that benefits all parties involved. This lets the business owner create a batch of money transfer orders, with once-off PIN codes that are given to the employees. These orders can be redeemed at specific retailers or at specific ATMs. This reduces the security risk of having to keep large sums of cash on hand, and saves the employer time that would have been spent either organising the cash or loading temporary bank details. The convenience factor for the business owners should not be underestimated.

A big win for employee social inclusion

The employees benefit because they do not have to travel with large sums of cash at regular and predictable times - improving their safety. They can access their cash when it is convenient for them via an easy-to-use system with cash out options at ATMs and major retailers, and the money is safe. Foreign workers or unbanked employees can also be paid quickly and get access to their wages immediately, without any cumbersome paperwork. In addition, there are no fees on withdrawals as there are when drawing cash out of a bank account.

Why banks should offer bulk money transfers

Ultimately, your customers and potential customers - the small business owners - want the best for their staff and their business. You can win over merchants and small businesses by offering user-friendly and simple banking. This functionality gives you the opportunity to build a relationship with new customers by offering much-needed services, and opens the door to upselling additional products and services.

Keeping in mind the importance of data collection in this digital age, you can take the opportunity to bolster existing services to gather useful information on your customers. And finally, do not discount the fees that are earned on these transactions that may never have come via your bank if the employer had to pay their employees in cash.

Retailers should also pay attention

As a retailer, the option of offering money transfer cash outs gives you the opportunity to increase customer footfall and build a new customer base; specifically, the business of customers who redeem their payroll vouchers in-store. Use this opportunity to upsell other products and convert new customers to your range of digital goods and services. You will also benefit from the fees earned on all VAS products, money transfer transactions included.

A tried-and-tested platform to boost your business

Electrum Money Transfer is the leading money transfer platform in South Africa. With existing integrations to both retailers and banks, we can quickly take your solution to market.

Chat to us today if you would like to explore this and other money transfer opportunities.

Helen Whelan

Helen Whelan is a Content Writer at Electrum. With a BSc (Hons) from Rhodes University, she enjoys the combination of creativity and technical topics that content creation at Electrum involves. Cats and coffee fuel her day.

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