The End of Cash?

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Image via CrunchBase

It’s interesting to see the number of recently introduced products coming to market which are designed to, in effect, remove the need for cash.

One that has garnered particular attention recently is, of course, Square. This comprises a small application that resides on your iPhone (or iPad, iPod Touch) or Android phone, together with a little reader that plugs straight into the audio input jack of the phone and turns it into a personal credit card payment machine that will allow the user to accept credit card payments from anyone for a small fee (typically 2.75% + 15c). With no costs for set-up, application or card reader this is sure to change the game for those tens of millions of small businesses, traders and professionals that have, until now, fallen outside the electronic payment net because they are too small for the card companies to serve cost-effectively.

But Square is not alone – Obopay allows anyone with a  mobile phone to set up an Obopay account and, for just 25-50c (plus 1.5% if you’re using a credit card to fund your account) send money – in other words, make a payment – to anyone else with a mobile phone, whether or not that person already has an Obopay account. Again, there are no setup costs.

And then there’s Intuit with its GoPayment service that also enables credit card payments from a mobile phone – this time with a Bluetooth reader – at a cost of 1.7% + 30c per transaction, although this service does have a monthly service cost of $12.95 attached to it (I wonder for how long, though, given the competition above).

Doubtless there are many others, too, either in stealth mode at present or on the drawing board.

What’s more, these systems allow you to build purchase histories by customers, offer loyalty programs and great levels of service more simply than the straightforward cash systems did – so even the smallest businesses can step up their marketing at little or no cost.

At present, all these products only work for you if you’re a US-resident/business, but it’s only a (hopefully short) matter of time before they go global and the way of transferring value changes forever from cash to electrons. No more looking for change, worrying about how the currency in a new country you’re visiting works, being concerned whether anybody’s watching as you withdraw a large amount of cash from an auto-teller…. And, of course, if you’re a small business, no more concerns about having the right change for those large notes that auto-tellers like to give, about the value sitting in your till, or being worried when taking your cash to deposit it.

It’s going to be interesting to see how society changes over the next generation as we move from cash altogether. Will the nationalistic bonds to a currency (and the resulting issues of payments from/to different countries and with travel) be removed, and could we find a common global currency?

And, of course, we’re seeing the continued drive for the mobile phone to be less a telephone and more a personal digital assistant in every way – clock, alarm, calendar, address book, diary, music player, radio, newspaper, camera, voice recorder and now, wallet. As an aside, it’s interesting to see how many of the Generation Ys don’t wear watches – their phones tell them the time. Has the watch industry got an answer to this, its potentially biggest threat?

We’re at a very interesting point in the 5000 year evolution of money as we know it. Will it disappear completely as a physical object in the next 20 years?

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5 responses to “The End of Cash?

  1. Have a look at TokyoFlash watches 🙂

    • Thanks, Aimee – just had a look: fun, funky and bright (sort of costume jewellery). Will they replace standard watches, or will the phone do that?

  2. The tax authorities in Sweden wants to get away from using cash to stop people getting paid under the table – i.e. raise tax revenues.

    Actually believe that the desire to raise more taxes the world over ,will be the main reason for abolishing cash. A cashless society will suddenly be just a fait accompli. The fact that we have gadgets to facilitate such a move will enable the tax authorites to raise tax revenues substantially.

    • Interesting point, Catarina. I guess stopping “under the table” payments might be a motivation for government. However, I’m sure that there will still be ways of transacting without government intervention – although this might require a return to bartering goods/services (there are a couple of web sites offering that, too).

      Frankly, governments need to look at ways to reduce taxes in order to encourage economic growth. Paying people for not working/contributing to society is suicide, as are large governments. They need to get back to recognising that civil servants are just that – serving the people that elect them – rather than “ruling over them” and creating bigger and bigger governments with more and more proverbial snouts in the trough. Not going to happen easily, though 😦

  3. Pingback: Tweets that mention The End of Cash? « Whit's End -- Topsy.com

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