Tim Hipperson, CEO of ZenithOptimedia, on why cash is no longer king
The question of whether we are set to become a cashless society is a hotly debated one. Some believe it will be 20 years before this becomes a reality, others say it could be much sooner. If you consider the fact YouTube only launched in 2005 (just eight years ago) and the first iPhone in 2007, two decades suddenly feels like a lifetime and so perhaps cashless payments are closer to the impending corner than we think.
Simply put, we cannot stop seeking to make life easier for ourselves; streamlining process through technology. With regards to payments, we already have a wave of companies looking to offer innovative solutions to solve the incredible burden of carrying around more than one item in our pockets.
Case in point, last year cash payments accounted for just 54% of payments made in the entire UK (and think how much lower that would be in London alone!). As bank cheques become redundant and wireless transfers the norm, naturally high street banks have become particular innovators in digital solutions. Just last month, RBS and Halifax launched revolutionary ‘cardless’ loyalty schemes that link to consumer debit cards, theoretically erasing the need to ever carry a store loyalty card again. No doubt other banks and retailers will follow over the course of the year as they look to lighten the wallet weights and make life easier for consumers.
Meanwhile Near Field Communication (NFC) has been introduced already by most high street banks – to both debit cards and through mobile apps such as Barclays PingIt and the recently trialled Natwest TouchPay – but even this is barely scratching the surface of mobile payment solutions.
For instance the latest iPhone has opted for a Bluetooth-based option with its ‘Passbook’, a mobile app that pulls together QR and smartcode-based loyalty cards, tickets and coupons. PayPal is another payments giant to throw its hat into the ring, with the recent introduction of ‘Beacon’, an app which allows users to keep their credit card in their pocket and pay effortlessly through their Paypal accounts. Beyond convenience, these apps also facilitate a more personalised user-experience, providing further incentive to use such services over traditional payment methods.
So, as these payment apps catch on and consumers get to grips with these various options, does this mean we’re approaching a tipping point for a cashless future sooner than we think? Technology is certainly providing us with the convenience we desire by reducing queuing times, as well as the amount of items we need to remember when leaving the house, but there is one large barrier standing in the way: security.
Despite the wealth of options, latest figures show only 7% of consumers actually use contactless payments (largely due to security concerns); illustrating that there are still some big challenges to overcome if we are to realise a cashless future, particularly with mounting headlines and fears around data protection, identity theft and further ‘invisible’ threats.
It’s understandable that data breaches could be a concern for consumers and any new technology will ultimately have to be proven to consumers as a viable and safe alternative to traditional payments. Convenience, after all, comes at a price. An increase in speed means less rigorous security checks. Swiping a debit card is quicker than entering a pin; but anyone can swipe a debit card – only one person knows that pin.
Thus, security-based features have begun to become increasingly apparent within new technology. Take Apple’s introduction of Fingerprint ID to its latest iPhone model. Perhaps in the next five years, we’ll be using a fingerprint to verify our identity when making a payment. Even more exciting, is the potential for mobile payments to occur simply through hand gestures, as 22Squared recently showed with its leap motion system ‘Secret Handshake’. With both this service and Apple’s fingerprint ID, the security risks of cashless payments could be significantly decreased through the use of identifying and gestural data.
Still the question of when we make the leap to a fully cashless society may not be down to technology, but in fact age. Younger age-groups already have little affinity to cash and are familiar with online ordering as a matter of course. They are also comfortable with the concept of cashless payments and far less attuned to the security concerns of their parent’s generation. To put things in perspective, it was once unthinkable that chip and pin cards would take on, yet now it’s the norm and we are quickly moving towards a new kind of identification altogether. As we shift towards the reality of one-device for all eventualities, it is clear a cashless society is certainly within the consumers grasp and this is dramatically set to change the way we think about money.
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