Fintech and charity: Does it work?
In Australia and overseas, fintechs are innovating the way people donate to and support vulnerable members of our society.
In September 2018, outrage erupted on social media after St Mary's Church in Sydney announced a new technology to allow cashless donations. "To keep up with the growth of technology in the 21st century, the Cathedral will be trialling the use of tap-and-go collection plates during the collection at the Offertory," the post on St Mary's Facebook page said. It drew comments such as "appalling", "disgrace" and "greedy". Some even described the new innovation as "out of touch".
General manager of St Mary's Cathedral Helen Morassut told Yahoo7 that they introduced the new technology to catch up with the rest of the world.
"We always had callouts that people don't carry cash anymore… we're moving towards a cashless society, that's just the way we live now."
While Yahoo7 reported positive feedback by those attending mass when St Mary's introduced the tap-and-go collection plates, the reaction from social media was still largely negative. The comments citing a "cash grab" and regarding it as tacky are indicative of the thin line fintechs need to walk when innovating in the charity sector: people may push back on charity if they feel it is being commercialised.
In the case of St Mary's, online commenters took issue with the minimum donation requirement of $10 despite it being based on past donation amounts, as well as the technology itself, which many took to be St Mary's playing to the younger generation rather than church attendees as a whole.
A big issue to solve
However, not all payment innovations in the charity and donation space have been met with similar criticism. On 2 November 2018, Visa announced it would be supporting charitable organisations, a notable one being The Big Issue, by providing contactless payment solutions.
The new option means 250 Big Issue vendors will now be able to accept QR payments made by the payment app Beem It as well as contactless payments using AirPay, a new point-of-sale (POS) device provided by Quest Payments and NAB. The AirPay device sits on a lanyard and works just like a POS terminal in a store.
CEO of The Big Issue Steve Persson said finding the right digital solution for vendors and customers was "crucial".
"There were many factors we took into account; from money being quickly available to vendors, to affordable technology, and from ease of use to reliability. As a social enterprise, digital payments need to support and empower our street vendors and at the same time ensure security and protection of customers' data."
Quest Payments Solutions provides a range of POS solutions for businesses, including integrated solutions that allow businesses to accept Alipay and zipPay payments. Its Donation Tap Point solution was developed with a view to replace or supplement the traditional charity coin tin. The solution has been successful, with more than one million dollars being processed through the terminals for the not-for-profit sector in the 12 months to September 2018.
CEO of Quest Payments Jan Mason says the payments solution benefits those accepting donations as well as those donating.
"There is added security for retailers and charities as traditional coin tins were sometimes stolen and retailers threatened, not to mention the expense of having to collect, count and deposit funds. Donation Point Tap deposits funds directly into a charity bank account daily," Mason said.
"The feedback from those donating or using any of our contactless charity technologies, as well as the charities, has been favourable. The majority of comments prior to the introduction of contactless donations is 'I would like to donate but I no longer carry cash'."
Tap and give
Fintech startup Pennies in the UK has gone one step further by giving customers a donation option directly in retailers' existing POS devices. By partnering with Pennies, retailers can offer their customers an option to either round up or top up their bill and donate to the retailer's chosen charity.
While the donations are small (limited to 99p), 60 million micro-donations have been made across more than 50 retailers since the program's launch. This has raised over £15M for over 400 UK charities.
Also in the UK, a social innovation project in Oxford, which is backed by Oxford University, has introduced a new way for people to give to homeless people. The project is called Greater Change and will see donations made through QR codes.
Passers-by looking to donate to someone who is homeless or sleeping rough need to scan the QR code to be able to donate. When they do so, they can see information such as the person's name, their savings goal and what they're hoping to use the money for. The donation is sent to a fund that is co-managed by a caseworker who helps to ensure it is used for the pre-determined goal, such as a rental deposit. The app is free for anyone to download and donate, and the receiver of the funds does not need a bank account to access them.
While the innovation is still being tested, it has faced some initial criticism. Speaking to the BBC in a short film on Greater Change, some comments were made that scanning a barcode on a person somewhat commodified them.
According to the Bristol Post, Jasper Thompson from the charity Help Bristol's Homeless said he didn't think it was a good idea.
"There's a lot of bullying on the streets, there'll be some ways someone will exploit it," he said. "It's degrading, it's like having cats and dogs on the streets. There's got to be a better way."
However founder of Greater Change Alex McCallion wrote on Medium that the purpose of the technology is to combat the problems faced by people looking to better the lives of homeless people through donations.
"One of the main reasons for this is our increasingly cashless society, with many not having the change on them to donate. Even if they did, people worry their money will be spent on substance misuse," McCallion wrote.
"These issues are compounded by the stigmas around being homeless. People on the streets are largely voiceless. Without being able to share their story, people assume the worst, and a lot of goodwill and potential to change people's lives is not realised."
McCallion believes Greater Change will be a "potential solution" to homeless people being left behind in the digital world.
Fintech and charity: Does it work?
The examples explored in this article show the fintech innovations for charity bring out mixed reactions. This may be the case because fintech innovation is relatively new, especially in Australia. Speaking to Finder recently, Corinne Proske from Good Shepherd Microfinance explained why she thought fintechs focus on making money rather than implementing positive social change.
"In Australia, there's not a lot of venture capital available, so they are [the fintech startups] forced to make their money really quickly. And we're only celebrating those who have made millions while other products are really interesting and can engage, but they're not going to be looked at. We are not creating environments or incubators or places to help bring out ideas that would actually add greater value," she said.
However, in a lot of ways, fintech was designed for charity. It's about making financial products cheaper, faster and more accessible. Fintech solutions especially do well in countries where there is a large unbanked or underbanked population. So why is there backlash to certain products or services when charities try to keep up with the pace of technological change?
The fintech-charity innovations explored here show people seem more hesitant with new charitable technologies when they bring a certain commodification or commercial element to donation. While it may make donating simpler, more convenient and even more transparent, it may be the case that some people would prefer the opposite unless they can be certain the charity is not making additional revenue on the technology or spending donations unwisely.
So, fintech and charity can work. And if it means keeping up with a cashless society that is going to see tap-and-pay as the norm, it's important that it does.