Fast Forward? Cashless Payments in a Cashless World

Make no bones about it: payments are becoming more automated. Money has gone digital, and so have our wallets. Sure, most of us still have leather and paper lining our pockets and handbags, and our kids have change rattling in their piggy banks. But these things might indeed become things of the past.

The first paper currency in the United States was introduced in 1861 as a result of coin hoarding during the Civil War. Plastic currency has been in vogue since the 1950s. Fast forward to 2013, when 80% of consumer spending in the U.S. was cashless. Today, mobile payment platforms and apps enable consumers to do almost anything with their phones, and new payment capabilities are being introduced almost daily. See the infographic A Brief History of Payments: From Stones to Phones for more insights.

Consider a future without cash, where instead of a register chime and a cash drawer swoosh the sounds of commerce are swipes, taps, or even silence. Let’s explore the potential impact on consumers in a fully cashless society:

More Robust Loyalty Programs

We’ve already seen the success of companies like Starbucks who are tapping into the powerful combination of mobile payment and loyalty programs. When consumers can digitally manage their relationships with their favorite merchants, they’re more engaged—making payments and earning points, managing memberships and redeeming coupons and freebies, and more. It’s not so easy—and certainly not automatic—when using cash, swipe cards, and paper coupons.

With cashless payments, data is key. In the background, their preferred merchants are amassing lots of actionable data they can use to develop products and programs. They’re also able to connect with them in more personal and distinctive ways, receive better customer service, and enjoy a more streamlined shopping experience end-to-end, from research to purchase to review.

Omnichannel Flexibility

Without the transfer of cash, consumers can enjoy a shopping experience virtually anywhere, at the register or on the couch. With mobile order-and-pay apps, they can do both in one transaction. They have plenty of cashless options, too: plastic or mobile wallet-based debit, credit, or pre-paid cards; online payments via social media or ecommerce websites; even integrated payments via carrier or mobile billing. People and pay for anything, from coffee to airfare, or even pay a friend back for dinner without having to make arrangements to see them in person. And with biometrics making a splash, people don’t even need to touch anything to make a payment. Forget keying in a password—the payment system recognizes them and facilitates a completely contactless transaction.

Superior Money Management

The physical nature of paper money makes it challenging for people to manage, aside, perhaps from keeping cash separated into various envelopes to help with budgeting. Currency that has a digital component is easily integrated into money management apps and programs, including consumer banking portals. Even for those people who don’t have access to traditional banking services, pre-paid cards that have been shown to help better manage their funds.

And in terms of time, cash takes longer to process. The merchant has to handle their cash—count it, make change—and the consumer has to open their wallet or purse,and organize their currency. Digital, virtual and contactless payments…they simply don’t take nearly as much time.

Better Security

Cash is inherently riskier. It can be stolen or misplaced. And it’s harder, if not impossible, to track. The relative security of digital currencies is well documented, and getting safer every day as consumers and merchants demand it and as technologies advance.

Will people ever say “goodbye” to cash? It’s hard to know for certain. There may be always be a time and place for it. Digital payment methods are growing in popularity and tomorrow’s consumers are growing up in a virtual world. Yet the fact remains that some consumers simply prefer cash—at least for certain transactions. And an article on the World Economic Forum’s website, Perspectives on a Cashless World notes that most customers today still need to be convinced to switch away from card-based to digital-based payments. Change takes time, but the world is eager to see just what happens to cash in the years to come.

For further reading, visit Mobile Payment Systems: The Era Of A Cashless Future on Hongkiat.com and How the UK Can Benefit From a Cashless Society on MobilePaymentsToday.com.