Covid-19 is keeping everyone at home – and away from ATMs and banks – due to social distancing measures and fear of contracting the virus from common surfaces.
More are turning towards online cash withdrawal services to avoid large crowds.
“It’s only a matter of time that ATMs and bank branches disappear-with or without SOCASH,” said co-founder and CEO Hari Sivan of the online cash withdrawal service in an interview with Vulcan Post.
Pandemic or not, the online startup remains intent on disrupting the cash circulation industry.
Founded in 2015 by Hari and his wife, Rekha, they wanted to allow people to withdraw cash easily from a network of affiliated shops.
With SOCASH, users can simply download an app on the Apple App Store or Google Play Store and enter the amount of money they need.
After that, they can enter the nearest SOCASH-affiliated shop, scan a QR code and pick up their cash.
With every transaction, users earn points which can be used to redeem rewards, much like the loyalty programme for apps such as Grab.
While SOCASH’s service comes at an opportune time during the Covid-19 pandemic, they have not been immune to the effects of the crisis, which has led to an overall economic recession.
Transaction volumes were down by 35-37 per cent, Hari reported.
To cope with the pandemic, SOCASH “focused on fixed cost reductions, reduced marketing activities and are working on expanding [their] product capabilities to further diversify the revenue streams”.
With that, the startup announced a new partnership earlier this month with Sheng Siong and Prime supermarkets.
SOCASH will be rolling out a new cash machine across 62 branches to reduce large crowds at ATMs and banks and engage in contactless methods for everyone’s overall well-being and safety.
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 cash from the counter.
Previously, in a 2018 interview with Vulcan Post, Hari had revealed that banks spent up to US$80 million (S$111 million) in 2015 to maintain ATMs, which hold up to S$400 million worth of uncirculated cash. That’s a tremendous waste of resources.
“They’re expensive to maintain, and while it’s hard for banks to operate without them, we see some banks in Asia that are aggressively closing branch operations and removing ATMs.”
“The network is breaking down and unable to meet the demand of the next billion starting their consumption journey in Asia,” he added.
By relying on SOCASH merchants instead of expensive ATM cash dispensers, banks reduce costs and gain access to a network of shops that serve as virtual ATMs – a self-scaling last mile network.
SOCASH replicates the ATM/Branch transaction fee revenue model. Banks are SOCASH’s revenue-generating customers, and SOCASH generates revenue with every transaction made in-app that it splits with the stores on its network.
“Our business is primarily driven by the number of transactions, which in turn is driven by the size of our network and the number of banks or financial institutions partnering us.”
SOCASH targets smartphone natives looking for a “small value cash-on-demand,” Hari explains. To date, SOCASH has recorded over 341,000+ downloads for the app.
“The drivers impacting user preferences are proximity, privacy and the financially prudent who stays away from credit cards, are sensitive to annual fees and have careful spending habits.”
With that, SOCASH remains highly anticipated among banking and investment circles.
The app raised US$5.5 million (S$7.6 million) in a Series A funding round with Vertex Ventures in August 2018.
SOCASH is also the first recipient of the Monetary Authority of Singapore’s Financial Sector Technology and Innovation Grant under the Proof of Concept Scheme.
However, the startup is subject to the same teething issues all new businesses face.
Users continue to rely on ATMs for cash withdrawals, as opposed to making the switch over to SOCASH.
“The reasons range from awareness, proximity, habit & product preferences,” says Hari. “There is a long lead…
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