We are entering a cash free economy – but how will you get paid?

Lighter pockets! Are we at the end of the cash economy

Lighter pockets! Are we at the end of the cash economy?

There is an inevitability about the cessation of cash and cheque.

  • Transport for London have moved over to contactless payments completely and black cabs will be required to take card payments.
  • Last year there were more electronic payments than cash payments for the first time – 52%.
  • The Bank of England are going to cease printing £50 notes because (they inferred) that the only people using them are those who don’t want to be traced, ie not paying tax or some other illegal practice.

We are carrying much less cash around with us, Contactless payments are increasingly popular and we can pay using our mobile phones.

There are quite a few benefits in this for small businesses:

  • If they have not invested in expensive terminals they can go directly to cheaper alternatives and use an app that allow you to use your phone to take a card payment, or take paypal payments.
  • Payment goes directly into the bank making accounting easier.
  • Customers tend to make more spur of the moment purchases when they don’t see the money. So you might find clients are more likely to buy that cream or have the extra session.

Purchasers are pretty happy with contactless in the UK but mobile phone payment has a much slower uptake, partly due to a lack of the appropriate technology. Mastercard and Visa needed to get together with Google and Apple to ensure safe and secure bank access. Visa has now made its mobile commerce technology available to non-affiliated third parties. Visa believes this rollout will help the company bridge the gap between digital and physical payments.

Payments made from your smartphone can replace cash.

Payments made from your smartphone can replace cash.

With the technology in place

the next step is getting customers to use the phone instead of the card. When we pay using a credit or debit card in a shop the money leaves our account immediately and goes into a holding account for a day or so before finding its way into the seller’s account. This holding account could be Streamline or it could be part of the sellers bank.
Using Apple, credit travels from your account to the sellers account in the same way. Apple Pay enters your existing bank card information from your phone via an NFC to the terminal and thus to the bank.

There are payment apps eg PayPal or Droplet which do the transaction by wifi and transfer the money to the seller at a later date. These are considerably cheaper for the seller to operate than traditional terminals but there is a percentage fee retained by the service provider.

We all have concerns about the security

of money transferred over the internet, we have all heard about Phishing phone calls or emails and banks being hacked, we all need to be careful with our personal data and cautious who we talk to. But it will be increasingly convenient for buyers and sellers to carry a single item for all transactions.