How Close Are We to Cashless Commerce?
Consumers worldwide are increasingly using their smartphones to make purchases, particularly at hospitality and retail establishments using point of sale (POS) technologies. The question remains, are mobile devices the new currency?
While mobile payments do come with challenges, depending on the phone itself, the software inherent to it and the apps available, it’s wise for businesses to make the payment process as easy as possible.
Mobile payments could eliminate the need for consumers to carry cash and credit cards by the year 2020, according to the Pew Research Center’s Internet & American Life Project. According to the Pew Research website, “A majority (65%) of technology experts and stakeholders expressed confidence that most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. These experts feel that the explosive growth in the use of smartphones and other mobile devices, combined with the convenience, security, and other affordances of mobile payments systems, makes these systems an obvious choice to replace established modes of payment in day-to-day commerce.”
The report notes that nearly every major demographic group—men and women, younger and middle-aged adults, urban and rural residents, the wealthy and the less well-off—experienced a notable uptick in smartphone penetration over the last year. Overall adoption levels are at 60% or more within several cohorts, such as college graduates, 18-35 year olds and those with an annual household income of $75,000 or more.
Also quoting from the website, “Although many respondents feel that smart-swiping represents the future of money, they are divided on how quickly this technology will actually be allowed to displace established and highly monetized transaction methods. In elaborating on their predictions, a number of respondents indicated that they expect this process to develop generationally, with younger users jumping to abandon cash and credit cards while their parents and grandparents may make the move to mobile payments slowly, if at all.”
We can look to a recent Timetric report, “Emerging Opportunities in Sweden’s Cards and Payments Industry,” that suggests that Sweden, “with its smaller population base and higher proportion of online transactions, is moving closer to a cashless economy.” This could be a harbinger for the rest of the global economy.
The statistics reported are impressive, noting that in 2012, 43% of Swedish retail purchases were made on smartphones. Statistics Sweden, the Swedish government agency responsible for producing official statistics regarding that country, estimated that in October 2012, 60% of customers between the ages of 16 and 74 who use the internet own a smartphone.
It is premature to make predictions about when the tide will turn for cashless commerce, but current signs are pointing in that direction, and some prognosticators are saying that by 2016 to 2020 we may be seeing less cash and more swipe in retail and hospitality commerce.
Timetric is a leading provider of online data, analysis and advisory services on key financial and industry sectors. It provides integrated information services covering risk assessments, forecasts, industry analysis, market intelligence, news and comment.