A Simple Solution to the Risk of Paying Workers in Cash

Do you have employees from Zimbabwe, Malawi, Lesotho, Mozambique or any other African country and want to pay their salaries electronically to reduce your risk and hassle of paying wages in cash? Read about the Mukuru Card that allows you to pay your employees’ salaries from the comfort of your home or office.

Did you know that around 23.5% of people working in South Africa remain outside the formal banking system? This translates to R12 billion in cash held outside of banks. There are many reasons for this, including physical and financial barriers – not being able to get to a bank in person or being unable to afford bank fees. And often traditional banking products can be complex and difficult to understand for people who have never been exposed to them – this can be overwhelming resulting in a person simply walking away.

While financial inclusion remains a serious issue for the country, employers are faced with the reality of paying salaries and wages in cash, exposing the employer to considerable risk.

Fortunately, FinTech businesses like Mukuru, are bringing innovative payment solutions to market that are being embraced by millions of businesses that are realising the benefits of a cashless society.

Cash payment risk factors for employers

Making up weekly wage packets and distributing them to cash workers is a drain on time and resources. It’s also fraught with risk throughout the supply chain. Starting with the withdrawal of cash, through possible errors in deduction calculations and cash counting, and ending with the logistics of distribution that include accidental loss or damage to pay packets, and risk of theft when handling amounts of cash.

Wasted time and lost productivity

It takes time to make up physical wage packets even when there are not a large number of workers to pay. Manual payroll requires a substantial time commitment, usually on a weekly basis – including a trip to the bank, counting out cash, writing out pay packets, physically handing out wages, then entering into record.

It’s estimated that paying cash wages takes three to five hours a week on average – or the equivalent of two working days each month. This is a significant time sacrifice, particularly for small businesses that run with fewer staff, and have less of a buffer against lost time and productivity.

Human error

A global survey suggests that 49 percent of workers will change jobs after experiencing just two issues around payment of their salaries. The last thing you want is to lose good workers, but miscalculations are a constant risk when making manual payments – and it isn’t easy to fix mistakes when you’re dealing with paper money.

Cash crime

Cash crime is probably the most compelling reason for businesses to move away from paying salaries in cash to finding electronic salary solutions. In the first six weeks of 2021, a total of 35 cash-in-transit heists were recorded – the latest spike in the alarming growth of cash crime in South Africa. In addition to fees paid to armoured vehicle companies, businesses must fork out for insurance against the loss of money while in the care of the carrier. The cost of cash-in-transit insurance starts at 1.86% of the declared maximum value of each transport.

For small business owners and their employees, every trip to the bank to withdraw cash wages is a potential risk that is no longer necessary to take.

A simple money card solution

Fortunately, the trend of FinTech companies entering the payments landscape with niche products that answer very specific customer needs, is meeting with great success. FinTech companies like Mukuru are creating simple solutions with sophisticated technology that solve the pain points of the consumer. When adoption of digital payments increases, cash dependency is reduced, and the ultimate result is financial inclusion.

The Mukuru Card allows employers to pay their workers with a simple EFT. This means you can use your online banking portal or any payroll system to make payments directly to your employees. 

In turn, previous cash workers can receive their wages or salary directly into their card, send money locally and internationally, swipe at retailers at no additional cost, withdraw cash at ATMs or retail outlets, buy airtime and prepaid electricity, and more.

To start paying your cash workers safely, advise them to get a Mukuru Card by calling us on 08600 18555, or by dialing free USSD *130*567#. Or click here for more information and a quick response to your questions.