Why cash-in payment kiosks in Ukraine: not a relic, but an important link in the payment chain
Ukrainian cashless segment is developing rapidly. You know, how fast it is, if you’re involved in this business or you’re the one of my blog readers. In big cities (especially, in Kyiv), the situation with the transition to NFC payments is simply excellent: there are already POS terminals with contactless payment options — even in small grocery stores among distant from the center living districts. The times have already passed when the owners of trade points had to be persuaded to use a card payment — now they ask for it, because without access to Apple Pay and Google Pay, they just lose at least 30% of their customers.
But what else can be found in almost every small store? What you can finds in any supermarket, often adjacent to ATMs? Cash-in payment kiosks. An enlightened facebook public will say that using cash-in terminals is an anachronism from the times of cash domination. Maybe, for them and for me.
However, the most correct thing that any person involved in the transaction business should do is exit from their information bubble and look at the Ukrainian payment market outside of Kyiv. Outside of motivational speeches at conferences and the cashless-free infrastructure of the capital. If you do this, you will see that payment kiosks are popular, they’re developing and in demand. And here why it is.
How they appear?
Payment terminals in Ukraine began to appear in parallel with the development of the fintech-industry, //firstname.lastname@example.org/ukrainian-fintech-sphere-stages-and-where-are-we-now-184a5d09e76e”>I told you about it a week ago. While non-cash payment methods were not popular, large and small cities of Ukraine were covered by payment kiosks networks. They gave the opportunity to add funds to the mobile account, pay for utility services, replenish any other services. People had cash and payment requests in their hands — and kicks was much better, than eternal queues of bank branches.
Principle of operation
Some networks developed their own payment kiosk park, but most of them worked (and still working) with dealer model. The terminal network provides the software and its maintenance, and the dealer buys hardware, puts it in and makes a profit from the payments, paying the network a fee for using this software. Such a model allowed the business to scale up much faster without geo-referencing and create a linked b2b business in addition to the basic b2c-offer.
Why are payment kiosks still popular?
The reason lies in the first two points. At first, the terminals gave us conveniently and possibility to pay for services any time — without banks. But they were really valuable in small towns and villages, in which terminal networks began to enter at the active scaling stage. Before the mass distribution of online payment systems, the terminals were the only way to replenish mobile, pay for utilities and other services.
Secondly, the banking and financial crisis has severely undermined people’s trust in banks and slowed down the growth rate of a non-cash economy — it have returned to active growth only with the last 2 years. Payment terminals accept cash from the customers, and, therefore, they were the main «entry point» for many unofficially employed and paid in cash. Of course, we can pretend that there were no such people, but for what?
Thirdly, we mustn’t forget: not everyone is accustomed to / wants to pay by credit card. Even now. Not everyone trusts banks, especially in small towns. Cash there is relevant and will be relevant for several more years.
And what will happen to them next?
There are more than 45,000 payment kiosks in Ukraine, owned by financial companies and banks. They accept payments from people all over Ukraine: from front-line territories to Transcarpathia. In cities with over a million and in small towns. Naturally, such an asset will not just disappear.
Adding funds to the bank cards of Ukrainian banks is already one of the most popular services in kiosks. This has become especially popular with the launch of the first Ukrainian mobile bank. The mediator status in the transformation of cash into cashless is an important and necessary role.
In addition, payment kiosks are also developing in terms of card payment services. Here the habit comes first: over the years, people have become accustomed to go to payment kiosk and pay for services there. This is a part of consumer culture, persistent user habit, which can be made more comfortable. After all, why break if you can build it better?