Following on from the UK’s decision to introduce new coins, there has been a lot of debate around the value of the expensive change over. So much so, that many have looked at whether we would have been wiser to increase the security and adoption of contactless
payment methods and digital currency, than investing in a declining payment method – cash.
Indeed, a quick view of recent trends indicates a cashless society is approaching. Since 2015 card and automated payments have overtaken cash in the UK and many other countries are swaying further and further towards a completely electronic community.
It’s another step in the evolution of money, a type of payment that dates all the way back to 350 BC. What first started as a system of barter has now transformed into a digital landscape where we are more likely to whip out our bank card at a till than
In India alone, the growing cashless economy is causing experts to predict the ATM to be almost redundant in three years’ time.
Sweden is one of the first countries that is expected to transform into a cashless society. Niklas Arvidsson, an associate professor at Stockholm’s Royal Institute of Technology believes the change will happen within five years.
The nation’s spending sees cash transactions make up barely 2% of all payments in the country, while the circulation of Swedish krona has fallen by 26 billion over the past seven years.
Surprisingly, it’s a similar case in Kenya and in the UK, a survey found that the use of cash machines in the UK is becoming less regular, with one in five people only taking money from a cash machine once a month.
That hasn’t stopped the country releasing new, security conscious currency. The UK’s first plastic note, the £5, was released late last year and a new pound coin entered circulation this month. The updated currency is aimed to be a lot more security-conscious,
with the coin said to be the most secure coin in the world. And that’s the main concern for electronic currency too.
A cashless society brings its own type of security problems but Europe is leading the way when it comes to combatting this. One of the most notable changes came with the introduction of chip and PIN cards. Twenty years on from its conception it’s still going
strong and has been joined by contactless and mobile payment.
Fintech companies are leading the way, with many leaders in the industry encouraging a switch to cashless transactions. However, security fears are an element that continues to scare some, leading the fintech community to calls for greater user education.
While many think contactless could be dangerous, for example, it in fact represents just 0.02% of all card fraud. Correcting misconceptions about how safe and secure digital transactions are will be the main battle towards widening their adoption.
Smartphones are revolutionising the way we use money even further, massively increasing the ease and availability of digital transactions. Money transfer companies such as TransferGo are certainly prospering from this, offering a secure way to transfer,
while direct payment apps are also giving users the option to pay digitally.
Apple Pay has been a major innovator in this and is largely seen as a player in the future of mobile payment. That market is expected to grow in the likes of the UK and Australia much quicker than the USA, where contactless or ‘tap-to-pay’ is already part
and parcel of daily life.
Naturally, as money and payment evolve further, we’ll likely see wearables becoming more and more popular to pay with, including a number of new inventions. Scottish brand Lyle & Scott recently released their contactless jacket developed with Barclay’s bPay
technology in the cuff. It’s an interesting concept (although one that can only be used when the weather is cold enough) and really does show just how contactless, and cashless, we are becoming.
So where do we go from here?
The main concern for people is security. Education is essential in this, so consumers know where the real dangers lie, but that doesn’t mean fintech players need to stop making improvements. Security needs to continue to push forward, stay one step ahead
of hackers, thieves and fraudsters in its ability to keep our cash safe.
Using services with integrated security functions such as biometrics, tokenisation, and two-factor authentication, reduces the risk of being attacked. Meanwhile, a new breed of younger banks are moving to innovative banking options that are not only pushing
boundaries security-wise but are helping their users keep track of their finances.
A fully cashless country requires more than people to stop using cash however, it needs a political decision. And, as we know, world politics is about as stable as the GBP right now.