The future of payment instruments: what will replace cash

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Cards, smartphones, a fingerprint or smart technology - something will inevitably replace bills and coins.

The fate of cash

The number of non-cash transactions in the world is growing rapidly and in some developed countries reaches Will Cash Disappear? about 92–99% (USA, Canada, Great Britain, Sweden).

Sweden came closest to getting rid of cash. Most Swedish establishments no longer accept cash, they look askance at it even in banks. Professor Niklas Arvidsson believes Sweden is on its way to becoming the first cashless society on Earth that Sweden could become the world's first cashless country.

In Russia, the number of non-cash payments is still not so large - only about 58%, but over time, electronic money will still replace cash. The question is what will replace them: plastic cards or what many of us part with only during sleep - smartphones.

Maps or smartphones

David Birch, an economist and digital financial services consultant, believes Predicting the future of money: When cash disappears, the main payment instrument will not be plastic cards, but mobile phones.

So far, payments using a mobile application are not very convenient, since they are tied to a specific bank. You use your bank's card and mobile application, and pay a commission for transfers to clients of another bank. In Russia, there is no universal application that would allow working with all banks and transferring money to any user, but this may change in the future.

For example, in Sweden, since 2012, there is a Swish application that allows you to transfer money between clients of all major banks in the country without commission and subscription fees for individuals. Now this application is used by more than half of the adult population of the country. Similar services exist in other European countries: iDeal in the Netherlands and Siitro in Finland.

In the future, a complete transition to mobile payments through a single application and even a complete rejection of bank cards is possible.

For example, in Kenya, about 55% of all payments in the country are made through the M-Pesa system, which is not associated with a particular bank or government and operates on the basis of the mobile operator Safaricom. This proves that the future of remittances does not necessarily lie with banks and cards.

Not only a smartphone, but also other technology

Cashless payment technologies are becoming more and more widespread in the world. According to Two in three phones to come with NFC in 2018 IHS Technology, 64% of all mobile phones shipped in 2018 will support NFC technology. This means that even more people will be able to conveniently and securely pay with their phone, rather than fetching a plastic card from their wallet.

You can already pay for purchases using your smartphone or smart watch. Why not go further and imagine that you can pay with a different technique?

At the International Consumer Electronics Show, Samsung unveiled It’s more than a fridge. It’s the Family Hub is a smart Family Hub Refrigerator that keeps track of your grocery list and allows you to order delivery of groceries.

At the same time, you do not need to pay for purchases with a card: the money will be debited from the wallet linked to the refrigerator account.

Visa, in collaboration with Honda, is developing Road ahead: Connected cars coming to a lot near you, a smart car with a built-in payment system, and even expects to bring the novelty to the market by 2020. The smart car will count the time spent in a paid parking lot and automatically write off money when leaving it, determine the required amount of fuel and pay for it at the gas station on its own, writing off money from the linked card.

And this is not the only such project: the system of payment for fuel through the application was presented by Jaguar and shell launch world’s first in-car payment system, also by Jaguar and the oil concern Shell.

Thus, payments are becoming more and more invisible. Perhaps, in the future, contact payments will disappear altogether. Only virtual cards or a single payment account will remain, to which all your devices will be linked.

Technology can go even further, and then your own voice or fingerprint can turn into a payment tool.

Biometrics and payments

Biometric technologies such as fingerprint are widely used in mobile applications. According to Biometric Authentication App Use Anticipated To Surge by 2019 by Juniper Research, the number of downloaded apps using biometric authentication will reach 770 million by 2019.

So far, biometrics is widely used only in mobile applications, but in the future it may spread to ATMs and payment terminals in stores. Moreover, not only a fingerprint will be used, but also other methods: face and voice recognition Voice and Facial Recognition to Be Used in Over 600 Million Mobile Devices by 2021, scanning of the iris of the eye and echocardiogram.

A 2017 Mobile Biometric Applications Biometrics Research Group report indicated that the widespread adoption of biometric technology in smartphones will accelerate the penetration of biometrics into mobile banking.

The researchers believe biometrics will dramatically accelerate mobile commerce, provide security and provide an intuitive consumer experience.

Biometric technologies really make payments easier: you don't need to remember any passwords or PIN codes, you can't forget your fingerprint or voice at home. No one can steal your finger or iris like a card or even a mobile phone.

However, biometrics also has its drawbacks. For example, if you burn your fingers or get sick and lose your voice, you may also lose access to your bank account. Over time, these problems will find their solution, and biometric payments will firmly enter our lives.

The impact of technology on life

Payments are becoming more invisible and invisible. If earlier you had to take a wallet out of your bag and give bills, now it is enough to bring your phone to the terminal, and in the future, you may not have to take it out at all - it will be enough to put your finger or say a word.

Meanwhile, the study One Of The Biggest Reasons You Overspend Is Already In Your Wallet showed that paying for purchases with a card, a person spends 12-18% more than buying with cash. So maybe invisible payments will increase mindless consumption and drive people into loans and debt? It all depends on how quickly these technologies will be introduced and whether we have time to learn the financial culture in order to spend virtual money wisely and carefully.

If you want to learn more about the future of payment systems and how they will affect the financial behavior of people, come to the lecture “How financial technologies affect our lives” from the series “Financial Environment”.

One of the leading experts in the retail payments industry, Viktor Dostov, will tell you what trends can be traced in the field of payment instruments, how we will pay in 5, 10 and 15 years, and how this will affect banks, the financial sector and our life in general.

The lecture will take place on March 14 at 19:00 at the Central Library. N. A. Nekrasova (Moscow, Baumanskaya street, 58/25, p. 14). Attendance at lectures in the "Financial Environment" cycle is absolutely free, but the number of places is limited. To register for participation, follow the link below.