The revolution of the cashless society (Part 1)

Ten years from now the way we think about cash and wallets will be very different.

For most people cash, and specifically physical money, will be kept at home and used only on rare occasions when needed. Similarly, physical wallets that are currently a staple fixture in people’s handbags and pockets will be stored in a drawer, or more likely, may have disappeared altogether. The world of payments is on the cusp of a revolution, one that will affect every single consumer and merchant on the planet, a transformation potentially as radical as the industrial revolution.

Mobile technology is leading the charge in the payment revolution.   We have already seen how a phone in our pocket with the power of a PC can change whole markets, even relatively new ones. Sales of iPods, for example, have been falling since 2009  having been superseded by smartphones, which have been subject to continuous innovation and have become highly networked personal computers whose technology is driving more and more connected devices, both wearable and in our home, in cars and even medical equipment. The effect of these “pocket PCs” on the market in the UK is palpable and this is resonating with old and new markets alike.  We’re now witnessing the rise of the smartphone as a virtual wallet, with Visa offering a conservative prediction that £1.2bn will be spent on mobiles by 2020 and Apple renaming its Passport app for storing credit cards and tickets as “Wallet”. In fact, I am sure that the majority of people in most countries, will have replaced their wallet or purse with a smartphone-based virtual wallet by 2025.

The last five years have seen numerous mobile wallet products fail soon after launch, for example the O2 wallet which lasted just 18 months. It could be said that these products were ahead of their time, trying to crack a market that was not yet ready for such radical change. However, this has been the common outcome of any burgeoning technology in its infancy. Sometimes it takes a Henry Ford or a Steve Jobs to innovate beyond early products and see innovation through to the mainstream.  Other times, market evolution can be the catalyst to consumer acceptance if the right infrastructure and environment, and the appropriate product and pricing, is in place. Mobile wallets, a virtual representation of your wallet that can hold your credit cards, loyalty cards and tickets, are set to not only create a revolution around how we pay for things but also how we interact with business, which will ultimately enable a new era of Connected Commerce.

Many industries are starting to, or have already, put technology in place to accommodate the growing trend towards smart mobile devices. The banking and financial services industry has been exploring authentication of identity using biometric verification for a number of years now and there are definite signs of a gradual revolution in Western European markets. In the UK for example, RBS and NatWest have announced that they will soon allow customers to access their bank accounts via their smartphones using fingerprint recognition technology.

Similarly within the retail sector, brands are continually making progress with mobile strategies. Mobile now accounts for 40 per cent of all online retail sales with one in four mobile commerce sales completed through smartphones  so for retail businesses, the benefits are huge. From lower costs and greater productivity, to better customer experience, it is clear that this is a movement where the positives far outweigh the negatives.

We don’t change our habits unless there is a compelling benefit or we are forced to and it can be argued that consumers love tangible “things”, i.e. having a physical plastic card. However, more and more frequently, value is being placed on speed and convenience which consumers are willing to make exceptions for and it is this convenience culture that is a major driving force behind the cashless revolution. From using contactless cards to pay for a train journey, to a one-click shop on Amazon, quick and easy is winning the war.