The Rise of the Cashless Economy

Tuesday 1 December, 2015 | By: Colin Fruk | Tags: finance, products, productivity, cashflow;

Through credit cards, computers, smartphones and embedded microchips, money is no longer a physical currency you put in your pocket. The era of centralised money - bits of paper and metal, backed by the State - is pretty much over. Decentralised money - bits of information, backed by user identity - is upon us.

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Cheques gone, cash going

The Reserve Bank of Australia's report, The changing way we pay: trends in consumer payments, found the number of transactions conducted by personal bank cheque is now functionally 0%.

Cash, once kind, is fast following. The proportion of payments made in notes and coins dropped from 69% in 2007 to 47% in 2013. Further, the value of that 47% only represented 18% of the total value of transactions.

Cards have taken top spot. The Reserve Bank found more than half the money everyday Australians transact moves by card.

Cash is fast, so it is still used more for small transactions. But not for long - contactless payments like Visa Paywave and MasterCard PayPass are rapidly eroding this advantage.

 

Here comes contactless

Both Westpac, for Australia, and Barclays globally, are betting on the supremacy of contactless payments.

Figures from the Aussie bank show the rate of touching, tapping or waving contactless tech - chip-cards and other devices - for "scheme debit card transactions" is now 60%. Meanwhile, Barclays says UK banks have issued the equivalent of one contactless card for every single person in the country. Similar trends are playing out on every continent, including Africa.

As more B2C enterprises install the technology, there will be a greater increase in the volumes of contactless transactions. Money flows will speed up and decentralise even more.

The physical aspects of money - the discs of metal and pieces of paper - are on the way out. Soon the concept of geopolitical currencies - Dollars, Yen, Pounds or Euro - might go too, because currency controls limit rapid, responsive trade.

It's why the rise of completely stateless and digital currencies like Bitcoin, which are already being used to make transactions in the real world, might be the point at which we really leave the old money age and enter the digital revolution.

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