Amazon, Apple remove friction from digital cash

The race is on to transition unbanked and underbanked consumers from cash to mobile and digital payment methods, with Amazon.com Inc. and Apple Inc. in the lead. The retail giants launched service offerings in 2017 designed to bring personalized shopping experiences to consumers who prefer to pay with cash. As mainstream retailers make these solutions available to cash-paying customers, payments analysts expect to see increased adoption of mobile and digital payments among underserved shoppers.

Account activation fees, expiration dates and complicated terms of service have been major impediments to wide-scale digital payments adoption, according to a May 2016, FDIC study titled Bank Efforts to Serve Unbanked and Underbanked Consumers. Report authors Kristopher M. Rengert and Sherrie L.W. Rhine found a range of "gateway products," such as check cashing, money orders and bill payments, aimed at building rapport between financial institutions and unbanked customers.

"Among the interviewed banks that pursued a strategy of offering low- or no-fee accounts, the vast majority felt these products were successful in engaging unbanked and underbanked consumers," the authors wrote.

Amazon Cash

Amazon Cash, launched in April 2017, enables customers to load cash into their Amazon mobile app or Amazon.com account at brick-and-mortar stores. Amazon Cash customers present a personalized barcode to a cashier, with cash, from $15 to $500, that they want to load. When the cashier scans the barcode, the funds are immediately added to the customer's Amazon account.

The service is currently available at 7-Eleven Stores, CVS, Speedway and GameStop, with more participating retailers expected, Amazon representatives stated. Touted as "the fast, no-fee way to shop on Amazon," the service was rolled out to 8,000 7-Eleven convenience stores in November 2017.

Gurmeet Singh, Chief Digital Officer at 7-Eleven, said the collaboration with Amazon is part of a multichannel strategy, with far-reaching objectives beyond serving underbanked consumers. He noted that 7-Eleven is using digital technologies to think ahead and delight its customers. "We want to give customers a choice," he said. "We don't want them to feel forced to take a certain route."

Another part of 7-Eleven's multichannel strategy will be integrating Amazon's Alexa into 7-Eleven's Amazon Store, enabling customers to shop from home, Singh stated. These customers can choose home delivery services or free in-store pick-up. More than 300 U.S. 7-Eleven franchisees have installed bright yellow Amazon lockers in their stores to offer free in-store pick-up to Amazon.com customers, he stated.

Apple Pay Cash

Apple Inc. disclosed Nov. 7, 2017, that it is beta-testing Apple Pay Cash for iPhone, iPad, and Apple Watch. Designed to be frictionless, Apple Pay Cash initially appears on a user's connected device as a payment option and easy-click arrow. Users can also use the app to add money to a virtual debit card account in the Apple Wallet, the company said, adding that they can also transfer funds through Apple Pay Cash and Apple Pay credit and debit card products. Money transfer services are provided by Green Dot Bank.

The app supports cash transfers of up to $3,000 and includes detailed historical reporting and emailed account statements. Debit card transfers are free of charge and credit card transactions carry a 3 percent transaction fee, Apple stated.

Payments analysts attribute growing interest in peer-to-peer payments to the Apple Pay Cash launch; they observed it was enthusiastically received at Apple's June 2017 World Wide Developer Conference. The solution works with Siri and includes additional, optional security features such as two-factor authentication and the ability to manually approve or decline transactions.

"To protect your account, you might be asked to verify your identity at certain points when using Apple Pay Cash," the company stated on its website. "If you don't want to provide this information, you won't be able to use the full functionality of Apple Pay Cash."

Slated for wide release with iOS 11.2, the solution will be available for U.S. users with iPhone SE, iPhone 6 or later versions, iPad Pro, fifth generation iPad, iPad Air 2, iPad mini 3 and later, and Apple Watch devices. Registered Apple program developers are now testing Apple Pay Cash; interested consumers can sign up to participate in the free public beta program of Apple Pay Cash on iOS 11.2, Apple representatives stated.

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