Cash-In

Cash-in is the transaction by which a customer exchanges banknotes for the same amount of electronic value in a mobile money account, wallet or agent banking account. The customer gives cash to an agent or deposits it at a machine, and the balance on the account rises accordingly. It is the entry point of money into a mobile money system.

The opposite transaction, in which electronic value is turned back into banknotes, is cash-out. Together they are abbreviated CICO, and the outlets that perform them form the provider's agent network. In economies where wages and trade are mostly in cash, a wallet is only as useful as the ease with which people can move between cash and electronic money.

The customer visits a mobile money agent, states the amount and gives a phone number or account identifier. The agent takes the cash and starts a transfer from the agent's own electronic balance to the customer's account, using a phone menu, an app or a point-of-sale device. The system moves the value instantly and sends confirmation messages to both sides.

No new electronic money is created at this point. The agent has previously bought its electronic balance, known as float, by paying money into the provider's bank account, and a cash-in simply transfers part of that balance to the customer. The agent ends up with more cash and less float. All electronic money in circulation remains matched by funds the provider holds at banks, typically in a trust or safeguarding arrangement required by the regulator.

Agents are the main channel, but not the only one. Cash can be paid in at the provider's own shops, at bank branches, and at deposit-taking cash machines. Retail chains accept deposits at the till, where the customer shows a barcode from the app. Funding a wallet electronically, from a bank account or card, is usually called a wallet top-up and is not cash-in in the strict sense, though some providers use the term for any load.

In most mobile money schemes cash-in is free to the customer. Providers want money to enter the system and earn their revenue later, on transfers, payments and withdrawals. The agent is nevertheless paid a commission by the provider for each deposit, generally tiered by amount. Since the provider pays out on cash-in and collects on cash-out, pricing has to prevent abuse, such as agents splitting one deposit into several smaller ones to collect more commission, or depositing and withdrawing in a loop.

Each cash-in uses up the agent's float. An outlet in a market town where people mainly deposit, for instance traders sending money to suppliers, will run out of float and must buy more by taking its accumulated cash to a bank or a super-agent. Managing this, known as rebalancing, takes time and travel, and an agent without float has to refuse deposits. Providers support agents with float delivered by field staff, overdraft or credit lines for float, and tools that predict demand.

Cash-in is the point at which anonymous cash becomes traceable electronic value, so it is a focus of anti-money laundering controls. In money laundering terms it is an opportunity for placement, the first of the money laundering stages. Rules commonly require the depositor to be the account holder or to identify themselves, the agent to keep a record, and the amount to stay within limits linked to how thoroughly the customer has been identified. Under tiered KYC, a basic account opened with minimal documents has low balance and transaction ceilings, and higher tiers require full know your customer checks.

Providers monitor for patterns such as repeated deposits just under a limit, many deposits by one person into unrelated accounts, and unusual volumes at a single agent. Depositing into another person's account at an agent, sometimes called a direct deposit, is restricted in several countries because it lets the sender avoid transfer fees and leaves no record of who paid.

Remittance companies use cash-in for the step in which a sender pays cash to a sending agent to fund a transfer. Payment providers serving online merchants use it for cash payment networks where a customer pays for an order at a shop, and treasury staff sometimes use it loosely for any incoming funds. In each case the common element is that cash enters a payment system.

Convenient cash-in is a precondition for people without bank accounts to use digital payments at all. The growth of services such as M-Pesa depended on customers being able to deposit small amounts near where they live and work. Over time, as salaries, benefits and merchant payments arrive digitally, the need for cash-in declines relative to other transactions, a shift that providers and policymakers treat as a sign that a digital payments ecosystem is maturing.