London Olympics shows the cashless society has arrived

Just to reinforce you are commenting on 'cashless' not 'contactless' to avoid any assumptions this was about NFC or mobile.

I left home yesterday and realised 10 mintues away I had left my (real) wallet.  I considered for a short time if I could make it through the day with a handful of coins and my mobile (various P2P payment apps, bank apps, registered for phone parking etc).  But no. The killer was knowing that I would need a real credit/debit card to pay the huge parking fee in London, so back I went ;)

I don't think the Olympics shows cashless has arrived at all.  I spent a day at the Olympic Park and at all the food and drink counters I used the only payment form being used was cash.  Now I agree not a scientific survey but I did spend time in queues (it was the busiest day at the Olympic Park) and watched with interest how people were paying at a range of food stalls that I could see.

Got to agree with Andy on this. The only thing Visa's contactless Olympics project demonstrated was how far away from a cashless society we truly are. Furthermore, the reputational damage to Team Visa from its ludicrous branding strategy at the Park - 'Proud to accept only Visa' - is incalcuable.

I think the point should also be made that Visa had removed many of the cash machines or switched them to only accept Visa cards. Where there were usually 50 machines, suddenly there were only 8 and the access to cash was very limited. But this was the only real event that caused a major issue and it would seem that, whilst not all food outlets accepted cards (surely an error on the side of LOCOG, Visa etc), those that did worked well. 

I think that cash will never be replaced and will always retain it's place in our pocket, wallet, purse etc. In the same way that a phone will never fully replace a card - the form factor is just to convinient. 

Spectators are told 6 months in advance that they can't pay by cash and that only Visa will be accepted at Olympic venues. On the day they visit the games, they don't bother to bring cash and visit the stores with only Visa in hand. The stores tell them that they can't accept Visa and that they must only pay by cash. Spectators are unpleasantly surprised by this contradiction. Added to that, they're hungry and thirsty. Therefore, they let loose on Twitter and this becomes a trending topic. This proves that, in the world of Twitter, people won't keep quiet when they're ticked off. But, it doesn't prove anything about whether cash or cashless is popular - if you interchange 'cash' and 'Visa' in the above situation, the same sequence of events would've resulted in cash becoming the trending topic on Twitter.

@ Raymond

"I think that cash will never be replaced and will always retain its place in our pocket, wallet, purse etc."

Have you told your colleague Mr Birch?! 

@MattW:

Thank you for highlighting the connection.

@RaymondR:

It's only after reading Matt White's comment that I'm able to make the connection with a blog post titled Would You Like Your Photo On Your Banknote, Sir? that I'd written on my personal blog (link not supplied in order to comply with Finextra policy, but it comes up as the first Google search result). My post was largely triggered by your colleague Mr. Birch's article regarding the pace with which banks are moving foward with noncash methods of payments.

@MattW He is aware that I am a dissenter.. in the same way, I do not believe stickers are the future either!

Frankly, based on first hand experience, it proved quite the opposite.

And it proved that giving exclusive rights to one provider is totally unacceptable. And if indeed VISA allegedly suggested that the problem was Wembley's not theirs, a robust response is needed. It is patently obviously ridiculous for an exclusive provider to make such a claim.

It wasn't just inconvenient not to be able to get soft drinks. Remember the venue didn't let you bring them in, nor did it let you out (and back in.) The tickets were for 2 consecutive games - surely it's a Health and Safety issue to ensure access to drinking water over that kind of period. The few water fountains were entirely inadequate for 80000 people.

And it proved that, as the head of family at a family outing, you need a walletful of cash as a contingency. The main reason for the queues - the tills need an ample supply of loose change, the effect of which was greater than any shortage of £20 notes in the wallets of the payers.

The reason the UK cheque replacement project failed was lack of attention to suitable replacements for all stakeholders and use cases. Let's not fall into the same trap with cash. Yes, we can replace much of it. But cashless society has arrived? Really? Are we assuming everyone attending football matches has smartphones, and that they are prepared to use them for making payments?

I'm posting this anonymously only because it's my personal view and nothing to do with my employer.

@ Raymond

Heretic!

Blame the people who designed the acquiring network at Wembley. They should have given all of the concessions a Square or an iZettle or whatever as backup.

My son has just returned from the Sziget festival in Hungary: 385,000 people there for a week and _entirely_ cashless. It worked perfectly.

There is no stopping the evolution to a cashless society.  It will be a convergence of the internet, credit and debit cards that have Visa PayWave & MasterCard PayPass, American Express cards that have ExpressPay, and a smart phone that can be used in much the same way as a credit or debit card with PayWave, PayPass, or ExpressPay.  These developments will eventually consign cash to history. 

Our smart phones will contain every debit and credit card we own, as well as all of our discount vouchers and receipts in digital form.  As a result, there will not be any need to carry any more bits of paper in our wallets.  Google will produce a Google wallet, Visa will have an e-wallet, MasterCard, Square, and PayPass will all offer a similar product, as well.  These products are called virtual wallets. 

I don’t think that plastic cards will be eliminated in future.  When a power blackout or some other inevitable technical issue occurs, plastic cards can be imprinted mechanically with paper, or some other technology will be developed to record the transaction perfectly.  Placing barcodes on all plastic cards that are read by a barcode reader that is powered by some other means could possibly perform this service.        

I am absolutely confident that we are on the verge of a tipping point regarding the eventual elimination of cash from our economy.  As long as there is a national regime of privacy legislation, the security and integrity of the internet is assured, powerful institutions such as state and federal governments will seek and obtain taxes in full in future.  This will help to fund our treasury and help to pay for community infrastructure, the operation of federal and state departments, all government projects, and policy developments.  In addition, governments will not have to bear the cost of printing, manufacturing, storing, and transporting cash. 

What I think will happen is that we will have a de facto cashless society first, where a majority of transactions will be done without cash, both in numbers of transactions and in the quantity of money involved.  We will probably have a de facto cashless society in about 5 years.  After a further 30 to 40 years, or somewhere thereabouts, cash will be eliminated from our economy after the nation has had a plethora of free and wide-ranging debates about this issue.  

It will be convenient not to have to ask for and carry any more paper receipts or physical discount vouchers, because they will be emailed to our mobile phones and personal computers.  How incredible, powerful, and efficient will both Visa's, Google's, Square’s and PayPass’s virtual wallets be, once they become commonplace?  Can the banking system adapt and catch-up? 

That is a rhetorical question.  The banking system will play an important role in the development of real-time transactions.  In the near future, transactions between banks, banks and all retail points, banks and customers, and between individuals, will be instantaneous.  A cashless society is in every bank’s financial interest as the progress of technological development accelerates and people desire the convenience and security that technology brings for them.      

Police and intelligence agencies will advocate a cashless society in order to limit or prevent crimes associated with cash.  Cash always provides criminal anonymity as in the drug trade, terrorism, burglaries, organised crime, illegal gun running, and cash thefts.  The crime of counterfeiting money will be completely eliminated.  The black economy is based on the criminal anonymity that cash allows.  This will dissipate when physical cash is removed from society.  An important part of the elimination of criminal anonymity in the future will be making emerging digital or virtual
currencies illegal.     

A cashless society is one where greenhouse gasses are kept to a minimum.  A society with cash is embedded to a polluting infrastructure.  The manufacture of cash requires the transportation and use of raw materials in manufacturing processes, with the final product transported to financial institutions.  Apart from the obvious risk to society from criminals, the transport of cash in security vans leads to greater air pollution in our communities.  This is not counting people who desire to make either a deposit or withdrawal to their accounts throughout the nation on a daily basis.   

A cashless society does not have to be the policy of any political party or government instrumentality.  It does not have to be something that is forced on any nation that is not broadly accepting and ready for it.  It should only be achieved after a plethora of wide-ranging national debate.  It will broadly come of its own accord through technological development.  The public will increasingly demand its security, integrity, and its many conveniences such as reduced queuing time for payments using payWave, PayPass, or ExpressPay, with a plastic card or mobile phone.       

Not only will a cashless society make paying at any retail point a quicker process, it will also make payment cues either shorter in length or non-existent.  RFID, which stands for ‘Radio Frequency Identification’, will eliminate cues altogether.  RFID will be adopted by supermarket chains in future.  All that a customer has to do is to load up their trolley with what they want to purchase, and simply walk out to their car without going through any checkout process involving staff.  RFID will accurately note what has been taken out of store by a specific customer, tally each item, charge the goods to the customer, and email a receipt to the customer’s mobile phone or computer.     

Banks and most businesses will want a cashless societybecause it will substantially lower their costs, by not having to deal with cash on a daily basis.  There will not be any need to count, store, or transport cash.  This will engender all banks and businesses to operate more safely and enjoy lower cost overheads as well. 

A cashless society will be evolutionary, convenient, and unstoppable.  In combination, all of these factors will prove irresistible for most if not all modern economies.  They will prove fatal for the continued existence of cash, the more we move towards the future.  A cashless society will provide a plethora of social and economic advantages, relative to a society that maintains cash.    

There may be no stopping progress to a less-cash society, but there are plenty of painful lessons en route, some of which can be avoided.

'One system's blip' can have far reaching consequences. If a critical service provider to a captive market is granted exclusivity, surely that includes an obligation to provide contingency. Cash is the default instrument for that, unless an alternative is deployed. Ergo, 'the cashless society has arrived' is premature.

Lack of provision of alternative instruments scuppered the cheque replacement project in the UK, which would have been a significant step towards a less-cash society. Its failure is being used as a reason to impose greater regulation on the payments industry. SEPA couldn't get to its end-date without regulation. Be careful what you wish for.

Going back to the orginal post, a recent article that seem to contradict the content of the post. 

http://www.thisismoney.co.uk/money/saving/article-2188142/Lack-appetite-tap-bank-cards-fraud-concerns.html - This is based on research from BankMachine, who of course do also have a website called cash-is-cool.com so, to saythe least, they are pretty biased (and indeed just looking at other articles it seems that Bank Machine appear a lot in negative articles on Contactless payments).

Then of course, this appears today http://www.nfcworld.com/2012/08/16/317281/gartner-places-nfc-in-trough-of-disillusionment/ and we see that NFC payments are 5-10 years away so hopefully the Brazil Olympics will be a better reflection of adoption than London. 

In this day and age of StanChart-Iran-AML-Sanctions-FATF-SAR-etc., I love the quaint and old-wordly notion that money laundering and other nefarious activities happen exclusively through cash.

According to a recent report I remember reading, cash is by far the cheapest of all MOPs accepted by merchants.

According to this machine-translated article, Sziget used a closed-loop contactless card for payments at the festival venue. Such systems have been working fine for over 5 years in many "closed" spaces (e.g. all cafeterias of a Top 5 UK Bank). I doubt if they'd ever take-off in an "open" cashless society - how many people would be willing to carry a stack of closed-loop cards, one for each store they visit?

Visa PayWave... MasterCard PayPass... American Express... ExpressPay... Google Wallet... SQUARE... PayPal... ISIS... etc. etc. I suspect they'd consign one another to history before consigning cash to history.

"how many people would be willing to carry a stack of closed-loop cards, one for each store they visit?"

None. That's why their phones will do it for them.

Even if they have Apple Passbook / equivalent app that takes the pain out of having to fire up an app and search for the appropriate "card" (cf. my Finextra comment), I'm not sure how many people will be willing to buy so many closed-loop cards.

Even if enough of them do, we come back to the perennial question about how many merchants would be willing to invest in the POS equipment required to support such mobile contactless payments.

Now, if we take open-loop cards via mobile, the business case for the merchant diminishes further since such payments would be treated as CNP and attract even higher interchange rates than the CP rates they've already been complaining about.

"Cash being the cheapest MOP for merchants" - please see http://www.riksbank.se/en/Press-and-published/Reports/Working-Paper-Series/2012/No-262-The-Cost-of-Consumer-Payments-in-Sweden/

where a study in Sweden shows that cash is attractive only for very small payments below 2 Euro.

US retailers are protesting high credit card interchange fees to regulators. In India, some merchants refuse non-cash MOPs altogether and others openly demand 2% extra for credit card acceptance saying they've pass on this amount to banks for credit card acceptance. According to this report, merchants in the UK find cash to be both the cheapest and the fastest MOP. Besides, I haven't come across merchants in any of these countries - or elsewhere in the world - levying a surcharge for cash payments or complaining to the regulator to bring about a reduction in their cost of accepting cash.

I do admit that cash must be costly for middlemen like banks for I've only come across them charging a premium for accepting cash payments e.g. additional fees for settlement of credit card bills with cash. As for Sweden, the article is authored by a bank and I'm sure cash is not attractive for them. I might start believing that cash is costlier for merchants and / or customers in Sweden / elsewhere if I saw one of them going on record to this effect.

Dear Ketharaman

The report on cost of payments in retail in Sweden is made by the Swedish Central Bank after a cost study involving retailers, cash transit companies, banks, issuers and acquirers of cards. The Swedish central bank does not have any cost for cash handling - and nothing to defend. Cash handling is Sweden including printing the bills is 100% in the private sector. On the contrary, the central bank earns the float on all the cash issued, and would have good economic reason to preserve cash as MOP but their academic study shows that cash is only good for the smallest payments  below 2 Euro compared with Visa/MasterCard debit cards. For credit cards the threshold is as low as 40 Euro. The average debit card payment in Sweden is 30 Euro and for credit cards 70 Euro, both with large margin below the beneficial usage threshold.  

@FinextraM:

TY for pointing out that the report on Sweden is authored by the central bank. I didn't know that. However, that doesn't change much because of the following reasons:

1. While I don't know about Sweden, central banks in many other countries - USA and India, for example - are expected and known to represent the interest of banks above others.
2. This report seems to talk of the overall cost of various MOPs across all participants in the payment value chain, whereas I'm referring specifically to only the merchant and the customer, who I consider the two most important members of the payment.
3. Thresholds can work both ways. Even if credit card acceptance might be cheaper for the merchant for ticket sizes above EUR 40 in Sweden, the situation could be the opposite elsewhere. For example, according the following extract from the bill payment website of my local utility, the merchant finds the cost of accepting credit cards to be too high to be absorbed above INR 10K: "For transaction exceeding Rs. 10,000 for card payment, Card holder to bear charges @1.2% for the amount exceeding Rs. 10,000." Let me add that the merchant doesn't charge any surcharge for any amount of payment by cash. It has been argued for years that merchants don't realize the hidden cost of handling cash, but, quite frankly, what they perceive as their costs is all that matters here. 

James I think your position in a 'Mobile Centric' role has resulted in a rather 'rose tinted' view of the Olympics, and what the Olympics did for Mobile/NFC payments - or more to the point - what it did for Cash payments... It appears that possibly something of an 'own goal' has been scored by Visa - They are not commenting on the success of Visa payments at the Olympics (Yet).... My guess is that, had the Contacless Olympics been delivered as promised then the wires would be singing with praise for contactless.. the best review (and something of an indictment) I have found here

http://www.digitaltransactions.net/news/story/3626

For those of you in a hurry - I have cherry picked the best bits below

-----------------------------------------------------------------

Which was the big payments winner at the Summer Olympic Games in London, which ended Sunday? Answer: Cash, a contender that’s entered every Olympics ever held. Contactless cards and mobile devices accounted for very few payments, according to Celent LLC analyst Gareth Lodge 

“Sadly, (sic?) cash won gold in this case, whilst I think other forms of payments simply failed to qualify for the finals,”

Lodge, during his visits last week, said he closely observed Games attendees making payments. Contactless cards and mobile devices seemed notable by their absence, and suffered from a lack of promotion.

“I asked every till operator that I used, and watched the transactions in every queue I was in, and the results seemed very conclusive,” his post says. “It suggested the vast majority of payments were actually made in cash. In fact, I can recall very few payments made by card at all and I witnessed absolutely none made by contactless, let alone mobile contactless. Even the Visa ATMs were, at the times I passed them, unused.”

Lodge said he found little promotion of the contactless and mobile-payment acceptance services Visa made available. For example, while drink-dispensing vending machines accepted contactless Visa cards, human drink sellers wandered the grounds and they accepted cash only, according to Lodge, siphoning off potential contactless transactions.

“Some of the contactless use cases were simply bypassed,” he says, he also saw vendors refuse to accept a number of U.S.-issued non-chip cards.

Also undercutting potential contactless volume was the lack of information, according to Lodge. He wrote that few visitors at London’s Olympic Park apparently knew that the maximum payment on a contactless card had been raised recently to £20 (about $31). (The earlier limit was £15, according to BBC News.) Lodge said he knew the new limit because of his job, but “absolutely nobody else seemed to know this … there weren’t any signs at the tills, let alone ambassadors promoting the benefits.”

A spokesperson for Visa Europe, the European licensee of Visa Inc., told Digital Transactions News that the association could not comment Monday, but might have a comment later.

Lodge said he also found information lacking about mobile payments. He did find a booth sponsored by Samsung, the phone maker whose new Galaxy S3 device with near-field communication (NFC) technology was given to 800 athletes and Olympics decision makers. “The guides on the [Samsung] stand did an admirable job on highlighting the NFC capability as a key feature. But having teased us, that was it--they didn’t even have any way of demonstrating it.”

Lodge admitted his observations were anecdotal,

“Instead of the industry showcasing the technology of the future, it actually showed why cash is not going to disappear anytime soon,” he wrote. “Customers don’t care about anyone’s pride when buying something-–the industry has to remember it’s about why they are making a transaction, not our feelings.”

Seen today .,.

Figures from Visa show contactless payments accounted for one in six under £20 transactions across all the Olympic venues. Visa installed 3,000 contactless terminals in the London 2012 Olympic and Paralympic venues.

Mark Austin, Visa's head of contactless, said: "We are pleased with consumers' response to the technology and have gained many useful insights that will help make contactless a commonplace payment method."

So, not sure if that is a success or not. Visa are pleased to I guess they coinsider it a success which is a key as they paid a lot for the right.