PaidByCash - A Niche Market That May Be Too Small

PaidByCash is a new service from the Retail Expansion Network. Marketed as a way for those without credit cards, and those who prefer not to use credit cards online, to easily use online shopping sites, PaidByCash hopes to increase the number of onilne shoppers while making a decent profit.

The service involves going to a local brick-and-mortar retailer in the PaidByCash network and exchanging your cash for a Virtual MasterCard, which can then be used anywhere online that Debit MasterCards are accepted. With 24/7 multilingual support, PaidByCash is obviously focused on those who are unable to obtain a credit card or don't wish to share their credit information online.

The biggest obstacle I see is that adoption of this service is an uphill battle against existing providers. For those who already have credit cards who simply don't want to share that information with each and every online retailer, services like PayPal offer virtual credit card numbers, created for use for a single transaction. If you already have credit, it's simple to use PayPal or Google Checkout for maintaining some form of financial anonymity.

As for the other markets, those who are otherwise unable to obtain credit cards, PaidByCash may actually be onto something. Two weeks ago Bank of America announced that they would begin offering credit cards to those without social security numbers, an issue that feeds into the hotly contested issue in the U.S. of undocumented foreign nationals. Some oppose the offering on the basis that it allows illegal immigrants to function more freely in society, while others blast the move as taking further advantage of a segment of the population already living in poverty. A service like PaidByCash, if marketed correctly, could placate at least the segment that feels Bank of America's move is a predatory business practice, since the only fees collected by PaidByCash are the merchant's normal MasterCard fees. The cards themselves do not have a fee attached.

As more and more people move away from cash and toward electronic means of payment, PaidByCash may be able to step in to serve a segment of the population left out of that migration.

Source: Reuters , VentureBeat