How fintech startup soCash breaks the cashless mold

A cashless society is exactly what the cash withdrawal platform wants, as contradictory as it sounds.

Fintech startup soCash believes that cash will still play a critical role even as Singapore moves ahead in its cashless journey.

“It sounds contradictory, but it works when taking into account the cash in circulation. If you look at the data, the bank notes in circulation is growing in all the countries whose economies are booming,” Hari Sivan, CEO and co-founder of soCash, told Singapore Business Review in an exclusive interview. “When your economy goes cashless it means that more and more liquidity stays within the bank, and the average cash withdrawal transactions shift from high value to low value.”

Cash and cheques account for 40% of payments in Singapore, a report from S&P show, despite efforts dating back to the 80’s to ditch the paper in favour of electronic alternatives. The city also has high cash adoption rates for a developed economy with cash in circulation accounting for about 10% of total GDP compared to about 2% in Sweden.

For Sivan, less reliance on using physical money for big purchases meant more low-value withdrawals. This aligns with soCash’s platform, which has partnered with local retailers and shops to allow people to withdraw cash from their bank accounts without actually visiting an ATM.

Established in 2016 by a group of ex-bankers, including Sivan and his wife Rekha, soCash enables consumers to access physical denomination in a place where there are no ATMs or bank branch will only need to locate a nearby soCash merchant partner through their app. The company—which Sivan proudly said is primarily composed of and is run by women—came up with the idea with the intention of solving the problem of cash flow.

“The idea was that as you increase the access to cash people will withdraw less money but increase the number of their withdrawals,” he added. “You don’t have to carry large amounts of cash anymore. Normally in an ATM, average withdrawals are approximately at $200 whereas in our system, it’s only around 30-40 dollars.”

soCash’s goal is for people to access banking services from retail shops. “The goal is for [retail] shops to be able to offer banking services the same way they currently offer telco-related or for logistics-related services,” said Sivan. For example, people can pay their telephone bills through convenience stores. According to Sivan, soCash’s goal is more ambitious than payments: they aim to create a platform that allows people to access banking services in retail shops throughout Southeast Asia.

As Singapore moves forward on its cashless ambitions, soCash's edge in the digital banking world doesn’t just rely on this expectation. Rather, it’s that virtual banks will need to rely on platforms such as soCash to offer an often taken-for-granted banking service: access to physical cash and related services.

“Virtual banks are not allowed ATMs. They’re only allowed to work with EFTPOS, and in Singapore there are only two available in the market. One is NETS, which is owned by the Big Three banks. The other is soCash. So we are the de facto platform [for digital banks],” stated Sivan.

“What we provide is a platform that connects banks, retailers and consumers on one interface,” he added. “Digital banks need a platform to sell products and services relating to the use of money, and we are well-positioned to enable that. We have all the licenses to take care of these.”

Sivan shared that they are in discussions with nearly all of aspiring players seeking to secure a digital banking license in Singapore.

“At the end of the day, in Singapore, we are the only network right now that can enable banking services using this kind of technology platform. We are seeing similar developments in other markets, [with] all Southeast Asian markets are considering virtual bank in some form or the other, and we are hoping that we can expand into these markets soon,” he said.

Apart from Singapore, soCash has also entered several markets overseas, particularly in Southeast Asia and East Asia. In October, the company partnered with the JCB to offer cardless cash withdrawals and foreign currency to Japanese tourists using its mobile app. This eliminates the hefty international cash withdrawal fees that often forces tourists to withdraw and carry large amounts of money.

It will also provide security for Japanese tourists travelling to places with low card penetration and high card fraud risks. The offering utilizes tokenization and two-factor authentication, according to the announcement.

In the next three years soCash plans to cover at least five large markets in the region. “We are currently active in Malaysia, Indonesia and Singapore, and the next ones would be Hong Kong and Thailand,” said Sivan. “We are still debating whether we should pick up one between Vietnam or Cambodia. We are also seeing significant opportunities in Japan, so that is also on the horizon.”