Surface Ripples

Cash - “So Last Century”?

With the proliferation of non-cash payment services, should we be surprised if we start hearing that cash is “so last century”? 

Before COVID, we were accustomed to using credit cards for in-store shopping and to pay for goods and services purchased online. COVID accelerated significantly the speed of non-cash service development as people did their best to avoid contact with any surface that might carry germs.  I remember vividly the first time I travelled back to the UK as the COVID crisis drew to a close and, on landing, when I offered cash in payment for something, was asked if I had a debit card.  Of course, I did and was able to use this, but the surprise was still there.

Not only can we make payments by simply swiping a card close to a card reader, but we can also make them direct from our smart phone or even our watch!

The humble cheque, so beloved of our parents and the “check guarantee card” that went with it (at least in the UK) has completely disappeared with the advent of direct online transfers.  It won’t be long before cash becomes a thing of the past in some markets.

For cash to disappear entirely, every store and online merchant will need appropriate systems in place.  Inevitably, these cost money.  For the small corner store in a remote village in the Himalayas, cash will remain king. If non-cash payments are to truly become the norm, then the cost of processing them for merchants must decline to almost zer0 or at least to the level where it becomes more profitable for them to use cashless payments than cash.  

The flipside of this is that, in the same remote village, people paying for goods and services will also need the tools to do so, that is, a debit card (or smartwatch!)

Interestingly, one bank in the UK at least has stopped issuing debit cards on its customers’ accounts. Why they’ve done this, I can only guess, but it appears to be because they don’t wish their accounts to be used for “small” purchases (and, perhaps, because the cost of producing the cards for their target customers compared with the number of times they’re used simply isn’t justified).  Their risk is that customers will simply transfer balances kept with that bank to one that still does offer a card.

Added to this, the likes of Apple Pay require users to have at least one credit (if not debit) card to use their service. Whilst cash may disappear or become a rare commodity (no doubt to the delight of central banks and governments worldwide!), cards will now be the rule.

Cards themselves bring other risks. We hear countless anecdotes of cards being “scammed” or “cloned”. There are now scanners that can read the information on one’s credit card from distances under one metre.  Cash at least provided some security against this, although not against muggings. 

Our payments horizon is changing.  Cheques have disappeared, cards are the norm, cash is common still.  Frankly, I didn’t see it becoming “last century” any time soon, at least not until the global payments system becomes sufficiently cost effective for even small kiosk-type traders to use.

Our business still doesn’t take payments by debit or credit card - yet, but I suspect it’ll be only a matter of time before we bow to the inevitable. 

I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With a wealth of international experience in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management.  I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website  provides a full picture of my portfolio of services.  

Labels: Customer Care, Financial, Strategy

posted by William Martin @ 12:17