In the age of ecommerce customers can find and buy products from all over the world with just a few clicks. There are very successful ecommerce merchants that don’t even have a physical brick-and-mortar location. This movement to online shopping is leaving the population of customers that do not use credit cards under served. Amazon recently created a way for this cardless population to use cash when purchasing goods through them. Here are a few ways your customers can use cash to shop on your ecommerce site.
The Cardless Population
Approximately 9 million households in the U.S. are unbanked and another 24.5 million ware underbanked, which means they use alternative financial services instead of a bank. These cash customers are unable to purchase your ecommerce products simply because they can’t pay in the way you would like them to. Other still do not feel comfortable disclosing credit card information to make purchases and would much rather use one of these alternative payment methods.
Sometimes a whole country or culture prefers to use these alternative methods. For example, 83% of Indian consumers prefer to collect on delivery. Consumers are hesitant to use credit card because of fraud risk. Also credit card aren’t as common in India as they are in the United States. The majority of the population would prefer to use an alternative payment method so companies that want to move into this market will have to adopt it into their business plan if they want to succeed.
Different Manual Payments
Common types of manual payments include collect on delivery (COD), money orders, and bank transfers. Non-card options can be easily add as payment method through your ecommerce platforms like Shopify, WooCommerce, or Prestashop.
Collect on Delivery (COD)
This method allows you to ship an item and then have the delivery service collect the payment when the item is delivered to the customer. The customer will pay for the shipping and the merchandise which will then be transferred or sent to you by the delivery service. The different delivery services have different requirements for COD so you will have to choose which one suits your business best.
- Collect the payment in the form of a check or cash. If it is a check, it will be forwarded in the mail to you. If it is cash, you will be sent a USPS money order for the amount
- Insurance can be added to cover up to $1,000 based on the amount to be collected or the amount of insurance coverage desired
- The amount collected can not exceed $1,000
- Accepts payment for up to $50,000 per shipment
- Takes business or personal check, or other negotiable form of payment, but will NOT accept cash.
- Upon the merchant’s request, UPS will accept a cashier’s check or money order only
- Accepts cash or check (personal or company) for payment
- Sends the collected check to the merchant or a FedEx check for the cash amount collected.
A money order is a way to transfer money similar to a check, but the amount is prepaid. Your customer would give cash to a third party, such as Wal-Mart, banks and credit unions, or the Postal Service for a small fee that varies from $0.70 – $5. Once you receive the money order you can cash it at various locations, but it is safest to cash it at the place it was issued from to avoid additional fees. This a very safe form of payment because it is guaranteed by the third party.
For the customer to use this method they will have to have a bank account so unfortunately unbanked customer could not use this method. Using a bank transfer will still avoid credit card information being disclosed. If a customer is interested in the method you will give them your banking information, such as your account number and and six-digit sorting code. They can perform this transfer online, over the telephone, or in person at their bank.