Money, Money, Money… In a Cashless World

As with every other facet of society, the way we spend and carry our money is changing. Technology is turning our wallets inside out and providing us with an easier and far advanced way of making transactions, with our mobiles, even with just a touch…

 

Paper has become digital. We are all aware that technology has swamped the paper trail we once had, which is a godsend within the business world: no more piles of paperwork staring you down at the end of your desk, and no more bins filled high with discarded work. Not only has the desk-job world let out a sigh of relief, but also retail has become all the more simple too – well, the word ‘simple’ depends on your point of view.

How many of us actually walk around with cash in our pocket anymore? Isn’t it just easier to slot a plastic card into a machine, tap in your well memorised pin number, and you’re away? We as a society have grown with technology, allowing our cash to no longer circulate like it used to; we’ve become a cashless society, and we’re not just talking about your usual cash card. Losing your cash or your credit cards will be a thing of the past with the new technology: mobile payments.

Data provided by Cash Loans suggests that, in Europe, 91.4 billion cashless transactions were made in 2013, whilst in 2014, only 1% of London commuters used cash. The use of money in a traditional sense is clearly declining, correlating with the huge growth in alternative technology, such as: Digital Wallet Apps (for example, Apple Pay or Google Wallet), Contactless Debit Cards, Email Payments and Pre-Paid Debit Cards. The good old cheque book might as well be named a myth nowadays, with as little as 1% of consumer payments made through this means in 2014 and 50% of Brits under 25 never even having written a cheque at all!

With 4.4% of adults in the UK ‘rarely’ using cash at all (only 48% of payments made by consumers, businesses and financial firms collectively were in cash in 2014, creating a predicted percentage of just 34% of consumer payments made by cash by 2024), how do they make transactions?

Payment technology has been embraced by big names such as Apple, Google, and Samsung (to name a few), who all have wallet apps – a powerful means of allowing you to store and use your debit, credit, ID, insurance and loyalty cards.

Apps like Google Wallet and Apple Passbook allow you to simply swipe your Smartphone in store to pay for a product. Now, not all consumers have devices capable of supporting the payment technology needed to use them in store, however, the access to this technology is evolving rapidly, with more retailers (such as Boots in the UK) starting to install readers to cope with Near Field Communication (NFC) for Android users, and the technology needed for Apple Payments.

Technology, financial, and retail companies are all looking to profit from mobile payments – and compromises will no doubt need to be reached. These relationships are tricky to arrange and will redefine traditional payment chains. However, several partnerships already exist. In the UK, Apple has already established several partnerships with banks (HSBC, Royal Bank of Scotland, Lloyds Bank, and Santander) and retailers/service providers (Boots, Nando’s, Waitrose, and Transport for London).

GfK suggest that younger generations are more interested in a cashless economy and more willing to accept the new technology associated with it, while older generations tend to be more hesitant. This reflects the trend of openness to the growing technology within society as a whole: Millennials have grown up with Smartphones, Debit Card payments, online transactions, and are now getting used to mobile payment and having little to no cash in their wallets almost all the time.

In addition to a willingness to adopt these advances and changes, consumers of all ages are experiencing a rapid transition to a point where the majority own a ‘smart’ device that is capable of cashless payments. As with any new introduction like this though, there are concerns: security at the forefront. Security is one of the greatest barriers to the economic benefits of a cashless society – not only must devices be set up to cope safely and securely, companies across all sectors must also gain the trust of their customers, demonstrating that this is as safe a way to pay as with cash in hand – if not safer. What will provide this reassurance? Security options such as passwords and biometric authentication, or finger print technology such as for Apple Pay.

The convenience of cashless payments is what will win hands-down with many consumers, in particular busy business people. Over 2,500 businesses in the UK are already using an alternative option to physical cash in hand: the modern day Barter exchange system. Bartercard aims to increase cash flow and profitability as well as enable trade with 100,000 Bartercard businesses worldwide. Since the launch of Bartercard in 1991, it has revolutionised the way businesses manage cash flow. Data analysed by Chris Edworthy, CEO of Bartercard and Director of Operations in Sussex, shows that our county’s non-cash economy is thriving, with more goods and services ‘bought’, ‘sold’ and swapped this past year through the Bartercard network. Chris proposes that the top five sectors active in Bartercard Sussex are: professional services, hospitality, automotive, construction and building, and food and drink. His analyses looked at the performance of all Sussex Bartercard members who have significant sales or spend through Bartercard.

What mobile payments offer that cash and cards don’t is reward and targeted marketing. With GPS, retailers can identify a potential customer by their location, and in turn offer them discounts and offers: the ultimate in audience targeting. Alternatively, if a retailer knows a consumer has been browsing for something online, they could text them a discount code to use in store or alert them to a deal through an app. Furthermore, mobile payments eliminate the need for paper coupons and plastic reward cards, meaning a decrease in the rate of cards and pieces of paper lost in the bottom of a bag, or ruined in the back pocket of your jeans. Businesses will additionally be able to make transactions quickly and efficiently, with minimal amount of risk – once the technology improves, that is.

The disadvantages, for some, especially now, may outweigh the advantages. For example, would-be thieves are undoubtedly working on hacking techniques in the anticipation of a cashless future, and hacking is made fairly easy at this point in time with biometrics used by systems such as Apple Pay extremely clever but no-where near perfect.

There is also the added problem with the battery life of a mobile phone: if you’re relying on Apple Pay and your phone runs out of battery you wouldn’t be able to pay. Some systems argue this is a futile argument, as payments will still be able to go through without battery. Some remain unconvinced.

These are things that will certainly need to be developed and improved if we are to become the cashless society that is promised to us. While there are logistical and security barriers to overcome, mobile payments will revolutionize the way consumers, retailers, financial institutions and technology companies interact. As consumers get to grips with the technology and understand how it benefits them and as companies increasingly see the opportunity to profit, mobile payments will become widely accepted and will ultimately replace cash and cards.

 

The information and facts within this article was brought to you by Choice Loans and GfK.