I was at a music festival in DC this past weekend. Hungry between acts, I hit up a food vendor; unfortunately, the vendor’s mag stripe reader wouldn’t read my credit or debit card. Standing there, I had the panicked thought I imagine many of my generation have in this situation: Do I have any cash?
Turns out, yes. A wrinkly $10 bill saved me from (mild) inconvenience. But the more I thought about it, I couldn’t remember the last time I actually used cash, for anything.
Uber rides? No.
Dinners out? No.
Even last week when I wasn’t feeling great and bought four bananas at 7-11 for 69 cents a pop, I swiped my debit. My roommates and I don’t even use cash to settle debts. That’s what Venmo is for.
I’m just one person, but I’d wager I’m not the only one of my generation I’m 24 who finds it mildly inconvenient to use cash. And mild inconvenience has the potential to change behavior. Just ask Uber.
A Threat To Cash?
As contactless payment platforms gain in popularity, it’s interesting to think about the future of cash. According to a Juniper Researchstudy, the number of mobile wallets using NFC and similar technology is estimated to hit 200 million by the end of 2016, and research firm Gartner estimates worldwide mobile transaction volumes and value will grow by as much as 35% through 2017.
Some, including Simon Black, who serves as the chief executive officer of PPRO, an electronics payments company in the United Kingdom, thinks cash is on the way out.
We are witnessing a payment revolution that will see the rapid uptake of emerging payment methods such as mobile wallets, virtual cards, or biometric payments,Black tells PYMNTS.com. The world of payments is transforming and very soon we won’t need to carry cash at all. In fact, I predict cash will become an obsolete payment method by 2025.
And although prognosticators have been predicting the death of cash since the introduction of the mag stripe, the rapid expansion and adoption of mobile devices that allow digital transactions pose a real threat to cash.
Mobile Pay Adoption
On Sept. 8, MasterCard released new research about how innovation in payment technology motivates customers to choose a specific payment method and what matters most when making that decision.
The research analyzed 1.6 million unprompted online conversations via social media relating to shopping and retail across 61 markets. There were three key findings.
1. Payments Technology Must Improve Convenience
Convenience was the most positively discussed aspect of new digital payment methods in shopping and retail-related communications, according to the report, with travelers in particular finding it important. These customers voiced their preference for using mobile payments on trips and leaving their wallet at home.
2. Rewards Are Necessary
Consumer rewards and benefits was the most vociferously and positively discussed topic across social media when it came to shopping and retail discussions, according to the research. Consumers expressed an eagerness for further acceptance of NFC payments so they could receive rewards. An example of this is MasterCard’s Fare Free Fridays in London.
3. A Need For Greater Acceptance
After rewards, the second most discussed topic was which retailers do and do not accept newer forms of payment. Fashion-focused shoppers were the most likely to mention retailers who accepted new forms of contactless and mobile payment capabilities.
Of note, Twitter was the most used social media platform that hosted digital conversations about retail and shopping.
The wave of social engagement we see every time new payment innovations are rolled out truly reflects the demand and desire for new and more convenient ways to pay, Carlos Menendez, executive director for international markets at MasterCard, says in the report. It also shows that payments have really moved into the heart of the shopping experience causing frustration when not accepted and engagement when fast, easy, and personal.
In a world of mobile payments, might the cashless consumer become king?