They say that cash is king, but is that really the case anymore? When was the last time you paid for something in cash? Could we be heading for a cashless world? The realm of consumer payments is changing every day, and it’s a fascinating place.
The Payments Council released A REPORT saying that non-cash payments overtook cash payments for the first time in July of 2014.
Last year, 48% of payments were made in cash, where 52% had been made with cash in the previous year. And the Payment Council predicts that further drops will occur in the future.
Although cash is still a popular method of payment, it’s becoming more and more important for service providers to offer non-cash options, like accepting debit and credit cards.
Debit cards made up almost one quarter of payments last year, and £380.8 million was spent using a contactless card. It’s clear that this technology is quickly becoming the favored option for many consumers.
Cash: A Long Road Ending
The origins of banknotes in Europe can be traced back all the way to medieval times, and they reigned supreme as the way for people to pay each other for centuries. And for a very, very long time, cash was the only option beyond bartering. Consumers and MERCHANTS all used and accepted cash, because it was the only way to pay for anything.
With the proliferation of credit and, eventually, credit cards, cash started falling out of favor. It’s still legal tender, and many people still only deal in cash, whether for budgetary or security reasons. But cash has had a long fall from its throne atop methods of purchase. Over the past twenty years or so, cash has seen some serious challenges. It’s just not popular anymore.
There are even countries that are working toward creating cashless societies. Large transactions have been banned in places like France, Switzerland, and Russia; and Sweden, Norway, and Denmark are all racing to become the first countries that have completely stopped using cash.
Credit and debit cards are especially useful in the online economy, where cash just isn’t an acceptable method of payment. With more and more shoppers hitting their favorite stores’ websites instead of their brick-and-mortar locations, plastic has become the king of payments in the modern world.
But even credit cards are falling by the wayside. Sure, they’re small and easy to use, but technology is starting to surpass this fall-back method of payment. They’re not likely to disappear anytime soon, and they’ll likely be the primary form of payment for a long time, but it’s hard to argue that they won’t be replaced.
Use of Cash and Credit Cards to Continue Dropping
The mobile payment scene is changing quickly—it seems like there’s a new company and a new payment method on the scene every week. So where’s it all going? What are we heading towards?
A recent release by the Japanese company NTT Docomo got me thinking about this question. They recently revealed a phone called the Arrows NX that uses iris-recognition software to verify users’ identities when they’re making payments.
Alibaba also has a platform called “Smile to Pay” that uses facial recognition to verify payers’ identities. Is this really that much better than entering a PIN? Sure, it’s more secure when it works well, but a good photo has been known to trick some basic facial recognition software.
Iris-recognition software seems very secure, but it requires the hardware and software to support it, which is why we’ve only seen it on one phone so far.
Digital wallets are the latest fad in payment technology—apps like Apple Pay and Samsung Pay are starting to catch on, but a relatively small number of merchants accept them, and consumers are hesitant to keep their credit card information in their smartphone.
Cards, on the other hand, we’re very comfortable with.
At the end of November 2013, 75% of all retail spending in the UK was done on plastic cards. At that time, there were 90.5 million credit cards in circulation in the UK. In 2013, half a trillion pounds of business was conducted using cards.
People love to use their cards.
At least for the foreseeable future, it looks like credit and debit cards will be sticking around. Cash is becoming less than less popular, but cards don’t appear to be going anywhere.
So don’t wait until the next phase of payment hits, because it could be a while. Make sure your business is prepared to take cards, no matter how big or small it is.
While cash will always be a viable option, you don’t want to limit the options that you’re giving to your customers. On the other hand, you don’t want to pay for card readers that eat into your profit.
Use a simpler, easier solution: SimplyPayMe. No monthly contract, no hardware to pay for, some of the lowest transaction fees in the business, with no need for a merchant account at a bank.
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