Once everyone’s darling, the fall of cash has been spectacular. Take last year’s announcement from a telecoms provider and supermarkets in the Netherlands stopping accepting cash payments, for example. Or the survey commissioned by the UK Payments Council that concludes that “by 2050, using cash could well be a minority activity [... and] a progressive move away from cash could hold many benefits.”
There is a point to this. Reports claim that cash costs every person in Europe 130 EUR a year for creating, distributing, collecting and destroying coins and notes. There are other downsides: 25 per cent of employees in Swedish retailers have been victims of violence during robberies, and there are calls to end the use of cash for theft prevention purposes. And obviously cash is a non-digital asset which cannot be spent on online purchases.
Mobile payments are therefore seen as the “new cash” and the way forward to bridge offline and online worlds. With more than 4 billion mobile phone users globally and only 1.6 billion bank accounts, the market opportunity is huge. Juniper predicts that 50 billion USD in worldwide sales revenue will be generated by Near Field Communication (NFC) mobile payments by 2014. PayPal expects that its volume of payments processed via mobile devices will exceed 3 billion USD this year. The company also predicts that by 2015, consumers will be able to leave their wallets at home as digital currencies replace traditional payment methods.
However there is some way to go. Research found that 90% of UK consumers have not heard of NFC, and more than two thirds have not come across the term “mobile wallet”. The technology and business case may be in place, but whether it’s time to cash out or not is still up for debate.