Is a cashless society really on the cards?
The next wave of cash-free technology will see you paying for your plumber with a smartphone. Or will it, asks Chris Beanland?
Wednesday 17 July 2013
Technology becomes meaningful the moment we see it solve a real-life problem. Boarding a late-night bus in London, you find you have no change – and an empty Oyster card. What to do? Run through the rain in search of a newsagents to top up? Make pleading eyes and scrounge the fare? No, use your debit card instead. One touch on the reader and, hey presto – dignity preserved.
New ways of paying for things without using cash are rapidly transforming our lives. Up to 10,000 Londoners a day have been swiping their plastic to pay £1.40 bus fares. This has emboldened Transport for London, which will roll out the idea to the Tube, Docklands Light Railway and the London Overground next year.
You can already touch your card to instantly pay for a steak bake at Greggs, while Urban Outfitters is binning cash tills in the hope that you'll be more keen to make an impulse purchase from an tablet-wielding hipstress lurking by the fitting room.
For years, we've been hearing about the demise of cash and the rise of "cashless" payments. Is that actually happening? "Businesses have no choice but to offer an alternative method of payment," warns Geraldine Wilson of Worldplay Zinc, a London-based firm offering pay-as-you-go payment machines. "If they don't, consumers will go elsewhere."
Wilson's company has just launched a £60 version of the card readers currently used in restaurants and bars. They are sold at John Lewis and could change the way we pay for things though traders have to pay 2.75 per cent of the transaction to Zinc. Plumbers may not be quite so keen to forgo "cash in hand".
It's not just card readers that are attracting attention from small businessness and individuals; mobile phones are where the action is now. "Turning your phone into a wallet – that's where it gets interesting," says Tim Green, editor of mobilemoneyrevolution.co.uk.uk. "The mobility of the smartphones and the technology makes everything instant. Think about dynamic pricing – retailers could send you different offers at different prices depending on where you are."
In Dalston, in east London, Lothair Hamann, owner of the Bird Café, explains why he's started using new software called Tab: "It's a new start-up worth supporting and they target independent businesses – we feed back to them." Tab grabs your mobile phone number and photo for ID and you top up credit online – with discounts as an incentive.
Competitors to Tab include Droplet, Sage and Barclays' Pingit. They were developed in Britain and turn your phone into a mobile wallet, making it easy to send payments – or buy stuff by quickly scanning a QR (Quick Response) code. Intriguingly, Pingit allows you to make instant payments to an esoteric quartet of countries: Botswana, Ghana, Kenya and Zambia. Why?
"Kenya is an incredible example of this technology," says Green. We Brits may want to save a few seconds in Starbucks, "but think of someone in Kenya queuing up all day to pay bills." Mobiles transformed communication in Africa – and now the same basic handsets Africans use might do the same for payments. "Mobile payment reallyis a new form of currency," adds Green. "You get money on your phone from an authorised vendor and then pay by SMS."
But how do you get all the rival mobile payment systems to understand each other? Zapp aims to become the standard in Britain. Its parent company Vocalink has form. It powers the BACS and direct debit systems that pay your wages and collect your gas bill, as well as running the Link network which binds together Britain's cash machines. "We estimate mobile will account for over 20 per of all payments within the next 10 years," says Zapp CEO Peter Keenan. Zapp wants to become the BACS and direct debit of mobile payment. Zapp will talk to your mobile banking app and all payments are instant. Is it safe though?
Keenan insists: "Zapp is a much more inherently secure environment as no payment credentials are shared with the merchant."
There's clearly money in money – whether the merchant pays 2.75 per cent to Zinc or we pay fees on things like changing foreign currency. But why should we let corporations and banks skim the cream?
Radical advocates of the online-only currency Bitcoin are trying to do away with money, banks and centralised currency controls altogether – in favour of democratised strings of code that exist in cyberspace. Alas, with pound and dollar signs flashing in front of their eyes, businesses everywhere have been licking their lips and piling in to the mobile money market. Twitter founder Jack Dorsey – the billionaire who wooed Barack Obama and makes no secret of his own political ambitions – jumped feet first into mobile payments when he launched Square in 2010. Now he's challenging eBay and Etsy with a new online "marketplace".
Square's Wallet app works by checking you into a restaurant. You say your name when you want to pay for your meal and the card you pre-loaded is charged. "Square Wallet makes every customer feel like a regular," explains the company's Katie Baynes. "Your name and photo appears on the seller's register when you enter."
Square isn't in Britain yet, but the US firm launched in Canada last year and Japan this year. So it might not be long before it arrives here with its eponymous Square card reader, literally a Duplo-sized white plastic block that plugs into a phone's headphone jack and allows small traders, like market stallholders, to take instant card payments.
Could we one day see buskers, beggars or chuggers brandishing Square readers and smartphones on street corners? "Cash has got a long life ahead of it," cautions Green. "If you want to buy a present for your wife, you still don't want a data trail."
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