Wednesday - Jul 17, 2019

We Are Heading Towards A Cashless Society


no cash pay_final

Has it ever occurred to you that you can pay your house help through Paypal? What about paying your shopping docket with your mobile device? These questions may not ring bells to many consumers today but they will be very relevant in the near future. Mobile phone payments are actually in use as we speak, though on a small scale compared to conventional cash based payments.

Peer-to-peer payments as they are commonly known as (in the traditional set up), may not be so popular yet in many parts of the world. That is why it is still necessary to go to the bank, ATM or simply use the ever risky credit card to  accomplish a transaction.

What if there was a better way to perform the same transactions without the need to carry cash, make trips to the bank or agonize over credit card statements? Applications like Venmo can now help you make payments instantly using your mobile phone. This trend is fast breaking through into the mainstream market in what is seen as setting the stage for the inevitable cashless market.

Pointers to cashless payments

blonde lady paying with cardsA study conducted by Harris Market Research showed that over 60% of income earning adults believe that conventional means of payment are destined to phased out by mobile payments. The question is how soon this is about to happen. It may not be in the immediate future, but the change is definitely on the horizon.

The reason why this change may be realized earlier than expected lies in a growing trend where people can access money on their smart phones and iPads. There are numerous applications coming to the market that allow instant cashless payments. This is just the beginning and more seems to be in store.

A digital financial report from BI intelligence unearthed the following highlights which show that the world is drawing much closer to a cashless environment—it is slowly happening.

  • The global P2P payments’ volume is above $1 trillion each year. The report goes ahead to note that a considerable percentage of these transactions were made through mobile phones. This can easily seem negligible, but the figure is expected to grow every year.
     
  • There are new and emerging markets that lack the financial infrastructure to make effective transactions/payments through conventional methods. Chances are high that these new markets will be tempted to use the uprising mobile phone money infrastructure. It is much easier to access and transact on a mobile platform as opposed to the ever costly monetary systems like banks which still tend to be out of the reach of millions of populations especially in developing parts of the world. In fact, a typical mobile payment infrastructure is a self-driven platform that does not require the efforts of any other party to function.
     
  • Mobile phone payments are already excelling in some parts of the world. In a country like Kenya in East Africa for instance, Safaricom mobile payment service (M-pesa) is currently used by over 92% of the total population. This service has enjoyed considerable success and it serves as a clear testimony that the mobile phone is shaping the future of cashless financial transactions. Other regions are also taking a keen interest  as the platform grows to include routine payments such as school fees, and purchase of most goods & services.

 

  • It may take quite some time for developed countries to adopt mobile payment services. However, the bigger picture remains-that the rise of the mobile money platform is a revolutionary trend to watch and could easily be the next central pillar of the world's financial system.

 

Advantages of P2P payments

Anyone who has used a mobile device to make payment or indeed perform any financial transaction acknowledges the admirable edge this new method enjoys over the conventional forms of payment. Some of the advantages that users of mobile money payment systems stand to reap include:

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  • Safe & secure transactions : The mobile device makes it safer to transfer money and track the transactions electronically. This will eventually lead to less financial crimes especially when cash is being physically transported.
  • Fast & convenient : there are already fast ways to make payments but the speed of mobile payments is comparable to none. You can authorize a payment with a click of a key from any location. You will never need to complain of closed or defunct ATM machines as you hold control over your financial transactions in the palm of your hand.
  • User-friendly- mobile payment is just an additional utility on top of something you already have. You already have your cell phone and so you only need to log into the payment applications. Just the same way you create accounts in social networks. 

 

Summary

While it may not be practically possible to predict the exact time that the world will operate purely on a cashless platform, there is every sign that this is a reality in waiting.

History has always demonstrated that the best technologies are those that disrupt the status-quo. And now cashless payment, particularly mobile based, is no doubt poised to disrupt traditional payment systems. It's only a matter of time.