Why This S’pore Startup Is Cashing In On The Idea Of Turning Stores, Supermarkets Into ATMs

Covid-19 keeps everyone at home – and away from ATMs and banks – because of social distancing and the fear of contracting the virus from common areas.

More and more people are turning to online money withdrawal services to avoid large crowds.

“It is only a matter of time that ATMs and bank branches will disappear, with or without SOCASH,” co-founder and CEO Hari Sivan of online money withdrawal service said in a interview with Vulcan Post.

Pandemic or not, the online startup remains determined to disrupt the cash circulation industry.

Easy money withdrawal with one app

Founded in 2015 by Hari and his wife, Rekha, they wanted to allow people to easily withdraw money from a network of affiliated stores.

With SOCASH, users can simply download an app from the Apple App Store or Google Play Store and enter the amount of money they need.

After that, they can enter the nearest SOCASH affiliate store, scan a QR code, and collect their money.

With each transaction, users earn points which can be used to redeem rewards, much like the loyalty program for apps like Grab.

Although SOCASH service came at a convenient time during the Covid-19 pandemic, they were not immune to the effects of the crisis, which led to a global economic recession.

Transaction volumes fell 35 to 37 percent, said Hari.

To cope with the pandemic, SOCASH “has focused on fixed cost reductions, reduced marketing activities and is working to [their] product capabilities to further diversify sources of income ”.

With that, the startup announced a new partnership earlier this month with Sheng Siong and Prime supermarkets.

SOCASH will deploy a new ATM in 62 branches to reduce the crowds in ATMs and banks and to adopt contactless methods for everyone’s well-being and safety.

Image credit: SOCASH

This is a significant departure from SOCASH’s original business model, which relied on person-to-person contact between store merchants and app users to withdraw money from the counter.

Added value for banks and stores

Earlier, in an interview with Vulcan Post in 2018, Hari revealed that the banks had spent up to 80 million US dollars (111 million US dollars) in 2015 to maintain ATM machines, which are holding up. $ 400 million in uncirculated cash. It is a huge waste of resources.

They are expensive to maintain, and while it is difficult for banks to operate without them, we see some banks in Asia that are aggressively closing branches and removing ATMs.

– Hari Sivan, co-founder and CEO of SOCASH

“The network is down and unable to meet the demand of the next billion which will begin its consumption journey in Asia,” he added.

By relying on SOCASH merchants instead of expensive ATMs, banks cut costs and gain access to a network of stores that serve as virtual ATMs – a scalable last-mile network.

SOCASH reproduces the ATM / Branch transaction fee income model. Banks are SOCASH’s revenue-generating customers, and SOCASH generates revenue for each transaction made in the application that it shares with the stores in its network.

Hari Sivan, SOCASH co-founder / Image credit: SOCASH

“Our business is mainly driven by the number of transactions, which in turn is dictated by the size of our network and the number of banks or financial institutions that partner with us.”

SOCASH targets native smartphones looking for “small pay-on-demand,” says Hari. To date, SOCASH has recorded more than 341,000+ downloads for the application.

The factors that influence user preferences are proximity, confidentiality and financial prudence which stays away from credit cards, is sensitive to annual fees and has prudent spending habits.

– Hari Sivan, co-founder and CEO of SOCASH

Inhabits a barrier to user adoption

SOCASH is therefore eagerly awaited in banking and investment circles.

The app raised $ 5.5 million ($ 7.6 million) during a Series A financing round with Vertex Ventures in August 2018.

SOCASH is also the first recipient of the Singapore Monetary Authority’s Financial Sector Technology and Innovation Grant through the Proof of Concept program.

However, the startup is subject to the same start-up problems as all new businesses.

Users continue to rely on ATMs for cash withdrawals, instead of switching to SOCASH.

Image credit: CapitaLand

“The reasons range from awareness, proximity, habits and product preferences,” says Hari. “There is a long lead phase of each product coexisting with other payment options.”

Popular blogs examining SOCASH have complained about the lack of trained merchants.

In addition, one of the main incentives to download SOCASH was born out of the desire to take advantage of the generous reward system, which has since been updated.

“Good things don’t last forever. They were, and probably still are, in what I call the “start-up phase,” says The Bulging Wallet, a personal finance blog.

“As you become more mature, your incentives for consumers become less generous – understandably,” he added.

SOCASH is also far from surpassing ATMs in terms of geographic convenience and density.

SOCASH currently has more than 1,500 withdrawal points in Singapore. In comparison, there are more than 2,050 ATMs off site, according to a parliamentary record in 2014.

Statista also reported in a 2018 study that there were 66.45 ATMs per 100,000 people in Singapore.

Transform SOCASH into a new global ATM

The solution is therefore obvious: increase the number of withdrawal points, change consumption habits and make every transaction count.

Image credits: SOCASH

While Covid-19 may have delayed SOCASH plans, Hari is determined to see the application move from country to country.

SOCASH currently covers more than 16,500+ stores in Singapore, Indonesia and Malaysia. This includes mom-and-pop stores, coffee shops, retail giants like 7-11, and supermarket chains like Sheng Siong.

According to Hari, the ideal market has a “large digital middle class population spread over a large geographic area, does not have a high consumption based on debt, has favorable regulators to allow wider access to banking services, (and ) the cost of cash as an important matter of bank profitability. “

Fortunately, much of Southeast Asia and the greater Asia-Pacific region matched this profile.

Hari also explains that the density of collection points per location will vary depending on the demands of the respective communities.

Our objective is to maintain a level of liquidity corresponding to the average daily demand which is around 15,000 to 25,000 SGD per day for an average residential development of medium size in Singapore.

– Hari Sivan, co-founder and CEO of SOCASH

New features

In addition to increasing the number of stores on the SOCASH network, the application will also increase its ease of use and its adaptation to the Covid-19 pandemic.

In addition to installing ATMs with its merchants to reduce human interaction, SOCASH will also deploy acceptance of QR payments once regulatory approvals for the ASEAN payment framework have been granted.

The startup will then pilot a sales platform, using the boutiques as virtual branches.

To increase the added value for banks, SOCASH will contribute to the customer acquisition funnel by “setting up the distribution of savings accounts, loans, credit cards, etc.”, explains Hari.

Abandoning dependence on reward programs, SOCASH will enter its next phase of life and will rely on network partners who “have promoted it within their community as local ambassadors”.

Online money withdrawal services will be the future

Hari sticks to his original warning that vending machines will become obsolete in the years to come. But it looks like it will take a long time before the money becomes obsolete.

International study by the Bank for International Settlements (BIS) recognizes that “unprecedented public concern about viral transmission through cash” has led to a decline in the use of cash in some country.

However, trends differ across cultures and the same risks exist for card payments, which require a PIN code and signatures. The BIS also indicated that there may be a need to strengthen cash transactions.

BIS said: “If cash is not generally accepted as a means of payment, it could open a” payment divide “between those who have access to digital payments and those who do not. This in turn could have a particularly serious impact on unbanked and older consumers. “

One thing is certain: contactless digital transactions, to which companies like SOCASH are heading, are becoming more and more relevant.

For now, SOCASH will focus on refining its product, adding value for banks and expanding the network of SOCASH merchants, pandemic or not.

“Our vision is distributed banking,” concludes Hari simply.

The goal? Transform each store and each customer into a virtual cash distribution network starting in Asia.

Featured image credit: SOCASH

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