As retailers battle to eliminate cash, PayNearMe expands it

As retailers are seeking to discourage cash use and billers are increasingly going digital, PayNearMe stands in the middle seeking to further enable the very people who depend on being able to use cash: the underbanked and unbanked.

PayNearMe, a Sunnyvale, Calif.-based unit of Handle Financial has actively been working to expand cash acceptance among billers, most recently among apartment landlords, to help consumers who live paycheck to paycheck. While much media attention has been given to retailers such as Shake Shack and Starbucks as they explore cashless stores, along with the legislators who try to stop them, a greater challenge faced by heavy cash users is the increasing digitization by companies who want to collect on a variety bills including auto loans, utilities, government taxes, and now the monthly rent.

“The cash economy is not going away anytime soon. While Shake Shack can choose not to accept cash, a government agency can’t make that choice. We bridge that digital divide with cash acceptance,” said Danny Shader, founder and CEO of PayNearMe. “We process multiple billions of dollars in payments through 7-Eleven, Family Dollar, CVS Pharmacy, ACE Cash Express and others every year.”

Kiyoshi Ota/Bloomberg

Further enabling the use of cash stands at odds with the increasing use of digital commerce as well as companies enabling Amazon’s Alexa to make online bill payments. One industry that is increasingly trying to convert consumers from using cash or paper checks to electronic payments is the apartment rental industry. According to the Federal Reserve Bank of Boston, 80 percent of consumers still pay their monthly rent in cash, check or money order. It’s with this massive opportunity that Zillow, YapStone and others want to electronify the monthly rent check.

“Our benchmark data is that if you accept cash, your cost of accepting is 10 percent higher,” said Richard Crone, principal of Crone Consulting. “Making a greater foray into the monthly rental business is not an easy slam dunk. If I’m a property manager and want to start accepting cash or move how I accept it to someone else, I have to think about enabling the big three cash acceptance networks first" — CheckFreePay (Fiserv), Western Union Speedpay and MoneyGram.

Forcing consumers who prefer to pay their landlord with cash to use an electronic form, which would require debit and credit cards or ACH, can be a major challenge since it affects a large portion of the U.S. population. These consumers are often defined by the government as underbanked and unbanked.

One-quarter (25.2 percent) of U.S. households fall into the definition of underbanked and unbanked. The FDIC reports that 6.5 percent of households (8.4 million households) are unbanked and 18.7 percent (24.2 million households) are underbanked (meaning that the household had a checking or savings account but also obtained financial products and services outside of the banking system, including payday loans).

“There are two sides of our business," Shader said. "First is the integration with retail, such as 7-Eleven and CVS. Then there is the integration with the billers, such as auto lenders. It’s a real difference between building a simple API that can be used by a wide audience versus integrating into MegaSys, which is the auto lending industry’s platform of choice.”

After having enabled cash acceptance for the auto industry, Shader noted that his company is actively working to integrate the cash acceptance option for property managers by integrating into the leading property management software billing solutions. That improves the customer experience for the renter paying the bill, which is important in reducing attrition of long-term renters.

“Any lender and property manager who isn’t providing a killer payment experience will lose out,” Shader said.

PayNearMe has also made great strides in expanding its network of cash acceptance locations by adding CVS Pharmacy in 2017, which it now claims totals more than 27,000 stores.

In September, PayNearMe launched its mobile-first payment platform, which enables merchants to accept payments from consumers “anytime, anywhere and any way they want to pay.” The expanded platform also provides the ability to accept debit, credit and ACH payments in addition to cash giving consumers and merchants alike added flexibility. It also features payment reminders and mobile wallet integration.