The death of cash

Imagine walking into a store, grabbing your favorite pound of coffee beans from the shelf, tapping through your payment on your mobile device, and strolling right out. No checkout. No lines. No waiting.
Now imagine that that before you go, the app you’re using reminds you that you might need coffee filters. Relieved at narrowly missing that feeling of remembering what you forgot halfway home, you go to grab those filters, too.

But (here’s where it gets really cool), the app alerts you that a different brand of coffee filters are available at a better deal–more for the same price! And they’re unbleached, so they’re better for the environment. Bonus! Your coffee will be fragrant with virtue and value.

This is the future of payment transactions, and it’s coming sooner than you think. At least, if companies like Wirecard have anything to say about it.

“We’re very much focused on the digitalization of payment and fees,” explains Dr. Markus Braun, CEO of Wirecard. “Wirecard’s newest offering is an end-to-end, fully digitized platform that we have built up, where we integrate PSP, issuing and acquiring competence with issuing and acquiring processing competence onto one platform. On top of that, we have built strong analytics and value-added services. And we definitely think that this is the future.”

The End of Cash is at Hand

Bad news for anyone who loves unhygienic, bacteria-circulating dollar bills: cash is on its way out. But for the rest of us, there is reason to rejoice. Cash costs us a lot of money. A recent study by Tufts showed that consumers lose about $200 billion annually by using cash.

This includes ATM fees, and other losses associated with cash use, like the time and transportation it takes to drive to the bank (which is, since you’re wondering, 28 precious minutes per month, per person).
But, the study maintains, “cash derives its value from the information it contains and is a classic information good, which can be replaced by a digital substitute.”

That digital substitute has already taken several forms. The credit card POS system is still widely used in consumer America. It is not, however, incredibly secure. Most big box retail stores are processing credit and debit payments on antiquated technology.

It’s clumsy, and would be easy to hack, should any no-goodnik decide to take the initiative. Most of us have experienced the petty theft of our card numbers at one time or another, or at least, the threat of it weighs on our minds.

On the other hand, online payment is more secure than ever. Not only that, it’s becoming the de facto method of purchasing consumer goods. The helpful researchers at Pew found out that 79 percent of Americans shop online; 15 percent make it a weekly habit.

With Apple Pay, we’ve seen the introduction of near-field communication technology (NFC). That’s fancy tech talk for when you wave your phone near that other thing and it just beeps and your payment goes through. It’s faster, and takes some of the psychological strain off of paying. But it’s also smarter.

The Future Frontiers of Cashless Payment

NFC is the infrastructure that will make it possible to merge online payment with POS purchases. “We are seeing the trend that Internet technology is entering in a lot of areas the physical world,” Braun explains.

“The smartphone is the first example. Before smartphones came up, we had legacy cell phones. So these smartphones are, basically, small PCs running on internet technology. We will see it with cards, and we are definitely convinced that also the whole point of sale infrastructure of a retail merchant will totally converge in the next three to five years towards internet technology… For the consumer, it will bring a much quicker checkout process. It will bring, for the merchant, the ability to much better understand the consumer, and in real time.”

On the merchant’s end, the benefits of cashless payment are difficult to overstate. The sheer amount of smart data and consumer insights provided by NFC payment will have merchants jumping at the chance to implement it. Furthermore, mobile payment opens the channels for highly tailored, personalized communications with each customer, based on his or her buying and search history.

And on the consumer’s end? Well, it’s just so easy! “Nobody likes to pay,” Braun points out. “The payment process itself just has to work very quickly at the high-quality level, and you have to solve bottleneck situations, and I think that’s the big, let’s say, added value of payment as a straight process. It will solve bottleneck situations… You’ll go into a store and you don’t have to go to a certain point in the store, but you can pay directly, when you take out the product, over your smartphone. That’s the vision that we call e-point of sale.”

When the payment process is easier, customers feel more rewarded. A breezy checkout makes room to increase a store’s volume of sales, and creates a positive user experience that supports the store’s brand. And if you can make your purchases with targeted efficiency, aren’t you more likely to return to the same store next time?

Of Dollars and Discmen

Over the past decade and a half, our cell phones have come to replace a variety of dinosaur-era household objects: our cameras, alarm clocks, notepads, dictaphones and discmen (remember those?) have all been absorbed into this one handy device. Why not our dollar bills and credit cards, too?

Unless of course you prefer to fumble through a wad of crumpled bills, six people deep in a line stalled by a coupon-clipping customer, when you just want to get to your cup of coffee. But, I’m guessing that you don’t. The future is now, and that future is cash free.

Melissa Thompson

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