Mobile wallets for salary transfers: The Business advantage

As the UAE makes its way towards a cashless economy, Paolo Gagliardi, CEO of Trriple, discusses the business benefits of moving to mobile wallets as a mode of disbursing wages

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Mobile wallets for salary transfers: The Business advantage Paolo Gagliardi, CEO of Trriple
By  Paolo Gagliardi Published  May 12, 2019

In the age of digitization, the concept of a cashless society is now more relevant than ever before.

The mobile wallet market is projected to grow to US$2.3 billion by 2022 in the UAE, according to a report by Mobile wallets have the opportunity to grow in this market and significantly strengthen the replacement of traditional cash payments with secure online payments. The increase in the adoption of using mobile wallets as the preferred mode of transaction is a positive sign for the future of payments.

The benefits of mobile wallets to users are quite well understood, even if adoption rates vary in different parts of the world. If one was to draw a parallel to the earlier days of banking – before they all came online – companies used to pay salaries via cheque or cash, which employees were free to deposit in a bank of their choice, or use directly. Now it is quite commonplace for employers to transfer salaries directly to employee bank accounts.

Taking this line of thought forward, is it time for businesses to explore mobile wallets as a very viable and secure alternative to pay salaries? This could be especially relevant for those who employ a high number of the traditionally unbanked population, earning less than the minimum balance amounts that most banks insist on. Here are some of the benefits to businesses that may be currently expending a lot of time and effort to actually make monthly cash payments to a high number of employees.

Direct, traceable transfers: Banks have made the direct salary transfer a seamless and low-touch process, and as long as the monthly salary remains the same for each employee, the employer only needs to sanction the monthly transfer and the predetermined amounts are transferred on a predetermined date. For businesses, this is one less process to spend time on, and is fully recorded by the bank. Effectively, the disbursement target is a bank account of the employee’s choice, and, if they had chosen so, it could as easily be a mobile wallet operator.

More engaged, productive workforce: Businesses that have a high number of employees in the factory floor, in construction, or in labour-intensive jobs can actually be directly impacted if staff need to take time off during working hours to transfer money home, pay their mobile or utility bills, or otherwise take care of regular monthly transactions. Employees who have one day off in a week often need to spend time in queues at service providers to conclude their transactions, meaning that their time of rest is severely impacted. Since it is expected that these people don’t have access to a bank account, or the required familiarity with online banking and international remittance, a mobile wallet can help them quickly carry out these transactions even when travelling to or from work, or easily in their free time.

Tracking work-related expenses: Workers often incur expenses that need to be recorded, supported by invoices, approved by a supervisor, and generally generate a significant amount of work and paperwork, often costing the business more than the expense itself. While some service providers such as fuel providers offer pre-paid solutions for company accounts, a mobile wallet can take away the ambiguity from a wide range of such expenses. Employees who are mobile can receive access to pre-paid company-owned mobile wallet accounts, enabling them to conduct a range of daily transactions, all recorded and traceable for company records.

The transition to becoming a cashless economy is not going to be quick and easy, and will require the buy-in from organisations, businesses, and individuals to actually become reality. Among users, too, there can be a fear of where one’s precious earnings are being held. Mobile wallets are now expanding their solution to include competitive differentiators in an effort to make the proposition more attractive to individuals. These include rewarding referral programmes, loyalty schemes to earn and redeem points, and much more.

A good starting point could be for employers to send a portion of salaries to a mobile wallet, accessible only by the employee, and pay the rest in cash. This way, the user has the flexibility to use the mobile wallet’s services to make convenient transactions online, and at the same time, have cash in-hand for their daily expenses. Once users grow their understanding and appreciation of the convenience of using mWallets, it will be an easy decision to continue using the application for their daily needs, and gradually increase the salary amount paid into the wallet.

The regulatory authorities in the UAE stipulate that all electronic transactions still need to go through a bank, in the background. Mobile wallets could gain ground quickly if banks see the growth potential of this trend, and realise that it is not competition but indeed a complementary offering. Effectively, banks can continue their outreach and service provisioning to one segment of the market, and at the same time, target the lower-ARPU (average revenue per user) segment in collaboration with a mobile wallet provider.

For a financial innovation to strengthen its national impact, it requires the buy-in of the business world, and this is the threshold at which mobile wallets currently stand. It needs a concerted Government and corporate push to tip mobile wallets into their rightful role within the cashless economy vision and seamless digital transactions ecosystem.

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