Having been in the card an online payment industry for over 25 years and seeing in my own lifetime the change of the banking industry moving to electronic payment and card payment in particular, it has always the perennial question has always fascinated me on when cash will become a very minor mechanism for the retail payment transaction?
For retail payments I always expected that debit cards would eventually replace cash when they were first introduced, particularly because I was personally was involved in the development of the IT services that were the foundation of the UK debit card scheme in 1988.
It was reported last year ‘One in three Brits now carry less than a fiver in cash, a study has revealed. More than one in five (21%) Brits are convinced physical money will disappear over the next 20 years, according to research released today as part of Skrill’s Future of Money campaign.
Mobile technology is now starting to replace the card itself with the ‘card’ details now within the smartphone where it can be securely held and much more sophisticated security implemented within the hardware further enhancing the security provided by EMV. With the ubiquitous nature of the smartphone even people who may not have a payment card have a ‘phone so I believe we will be seeing a step change in the decline of cash as a payment method.
But should we now start to be active in reducing the use of cash as a payment method? Cash is the most anti- social method of payment available to us, in a world where we are all concerned about the over consumption of resources should it not be beholden on all of us to actively discourage the use of cash? I think that the use of paper money is now just unnecessary. Retaining coins for small purchases and to ensure the numismatists can continue their hobbies would seem reasonable, especially when we consider the life of a coin can be measured in decades, but paper money with its lifetime of less than 2 years is surely a resource consumption we all should be trying to eliminate, we don’t even recycle the ‘paper’, notes they are just burned when no longer fit for use!
With paper money the resources that go into its production with specialised printing inks, complex watermarking, insertions for special security features (metallic strips, etc.), are resources that are of a high ‘carbon footprint’ we would all like to eliminate. However, much worse is the consumption of resource and the threat to personal well being that paper money generates relating to its storage, transportation and handling. Paper money demands strong rooms, which use vast amounts of specialised metal, for bulk storage, special strengthen buildings, complex security services, and, even for moderate amounts of paper money, it has to be stored in a safe which is, in itself, a heavy, engineered metal box with complex locking devices. Just think how much resource has been consumed in providing an ATM, with its safe, secure room (or Bastion Pod), security cash in transit provision etc. just so you can get some cash with your debit card and then hand that cash over to the supermarket checkout, where it then has to be counted, reconciled, securely stored, securely transported to the Bank, counted, reconciled, securely stored, information updated in multiple accounting systems etc. etc. when one payment with a the same debit card would simply implemented a series of automated electronic steps.
It should also be considered that paper money transportation requires the use of ‘gas guzzling’ armoured vehicles, just think how many miles are travelled every day in armoured vehicles just to replenish and ATM estate, we worry about ‘food miles’ should we not be worried about ‘paper money miles’ every time we use cash for a transaction?
By using paper money we also place third parties at high personal risk, the armoured guards, the train drivers, the bank clerk all are at demonstrable risk of being injured or even killed just because we require them to handle that cash.
It also confuses me how cash can be ‘cheaper’ than other payment methods, it has to be the most expensive payment instrument to handle, it has to be physically counted and reconciled at every step in the chain, the wasted man hours involved in those processes must be huge. In this respect the Banks and financial institutions need to ‘get real’ on the costs of cash, it should never be the case that the charges for a card transactions are greater than the costs of managing a cash transaction, there needs to be a hard analysis and transparency of the costs that are involved and the appropriate cost for the cash transaction apportioned to that payment, so that merchants realise what is being charged for cash in a manner that can be truly compared with a card transaction.
And finally why should anyone be able to ‘do you a better deal for cash’? My only assumption is that by doing so they evade tax payments, so by them evading tax that means the cost will be a cost on society as a whole. We have all seen how the evading of tax by the likes of Starbucks and Amazon has incurred the wrath of all honest tax payers so I am sure none of us wish to contribute to such evasions, as desirable as that ‘discount for cash’ may appear, by accepting it we become part of the fraud – yet another anti social consequence of the cash transaction.
So I believe it is our responsibility, as payment professionals, to actively extol the virtues of card and electronic payments to reduce and aim for the elimination of the archaic, antisocial, resource consumptive, high risk payment method that is cash. We must take personal responsibility in our own dealings to minimise cash as a payment method. We should take the opportunity to point out to those who will listen how they should minimise their use of cash by imparting to them our knowledge on the social benefits of electronic payment. And, when in our professional engagements, take the opportunity to ensure that the Banking and Financial institutions we work with honestly account for the cost of processing paper money transactions.