By Tim Ferguson, 9 November 2007 14:54
NEWS
Cash faces stiff competition from electronic payment methods in the coming years as consumers realise the benefits of emerging technologies.
That's according to Gartner analysts who predict making payments through mobile phones using virtual currencies - such as Second Life's Linden dollars - could be a reality in the not too distant future, making cash obsolete.
Speaking at Gartner's ITxpo in Cannes, Gartner principal analyst Alistair Newton said: "With digital money, we believe we're on the cusp of the next revolution."
According to Newton, the first money revolution was the move to paper money, which proved it's possible for money to evolve without significantly causing problems.
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Newton cited three developments contributing to the increasing digitisation of money: the consumerisation of IT, the globalisation of money markets and the basic convenience of the emerging payment methods.
He said: "It's easier for you as a customer to use electronic payment rather than cash or cheque. The whole digitisation of money allows greater flexibility."
But in order to work, Newton said the fundamentals of money need to remain - namely security, value and trust.
Newton pointed to Transport for London's Oyster card scheme to demonstrate how money is already becoming outmoded.
A single fare costs £4 when using cash but less than half that when using an Oyster card. "Cash is being charged at a premium," he said.
Fellow Gartner analyst Adam Daum said: "We are moving into an environment where you will see a proliferation of global payment types."
But Newton admitted: "Cash is still going to be around but the pressure on cash will grow."
Comments
There are 9 comments. Join the discussion
1. anonymous
So 'Big Brother' will even know what newspaper & fags you buy...
2. Graham Coles
What a load of cobblers.
Next time anyone turns up at car boot sale or market I suggest they try paying for anything using a wireless cash card and see how many people whip out an rfid transaction terminal.
And as a customer, I have rarely found cash to be an inconvenient purchasing device. Who exactly is experiencing all these problems? (probably the same people who are desperately losing vital seconds from their lives getting money from cash machines!)
As the article says, trust is a big issue when it comes to cash (also didn't mention anonymity, probably because with these cards, you don't get any).
Still doesn't mention much about the fraud problem either, since these cards seem to require little or no authentication and can be read remotely.
Perhaps we do need a revolution, ditch these flaky cards and stick to hard currency.
3. Christopher Hubbard
Has this kind of prediction not popped up every few years?!
People will always need cash. The point is that it can be split into smaller denominations and spread around the person. I personally put £10 in a separate pocket - on a night out - so I know I have enough for a taxi. If someone takes my wallet then I've always got the £10.
Not only this... What about buskers and beggars?!
"Sorry, I've got no Change"
"It's ok I take Lindens, Mondex, and Visa"
4. Karen Challinor
... and so continues the march to enable the tracking of each and every financial transaction no matter how minor and along the way line the pockets of the card manufacturers
exactly who's business is it that I bought a sandwich and a decafdoublehalfcafwithatwist and to what use will this information be put ?
5. Roger Huffadine
With dwindling oil reserves and hence power supplies the future of 'digital' cash looks bleak.
Even now you can get caught in a store that has an electricity failure & be unable to buy products because you don't have cash -- sometimes you even have cash but because of all the technology the staff can't take it off you.
Scratch the surface of this cashless society theory and you find no substance that will support the essentials of security, value and trust.
6. Jay
cash will remain, as there will always be a black market, drug dealers etc (or they'll trade in more dangerous ways)
7. anonymous
The problem with citing the oyster card is that it is a niche payments system, in that it just covers London.
I live close to London that I could travel in regularly, however I do not travel in often because I am penalised for not having an oyster card, and because I don't travel in often enough I don't want to have an oyster Card with funds stuck on it which I would rather use.
Also have people not noticed some smaller business who have minimum spends for using credit and debit cards as well as cheques because of the charges that are made?
8. anonymous
Supermarkets love the idea and are already trialling it... think of the savings on staff and the marketing benefits of all that lovely data they're collecting.
Government loves it because it will reduce the black market (initially!).
Government also loves it for the collection of Lifestyle/Carbon Taxes.
Yes, we will need to be wary of which newspaper, bottle of wine or mode of transport we use - because it will cost us... ID cards will provide the gateway to the Inland Revenue (one of the main reasons behind the "entitlement card", sorry "ID" card scheme... you won't get your trading card without flashing your ID at the bank! Those on benefits will be able to use their "entitlement cards" - I mean ID cards - directly, but only at certain outlets.
The black market will survive (and I don't just mean drug dealing) because people don't like being cheated, suppressed and bullied but it worries me how future Government will tackle the problem... don't start me on "Blunkett's Brown Shirts... sorry, I mean Bobbies".
9. MikeW
Several EU countries have had card-based cash for a several years, and it's treated as cash too - no charges for the small retailers, IIRC.
I bet those trying to persuade Londoners to use the Oyster card will want to take the same cut that credit card firms take on the transaction.