Mobile Phones, The New Cash?

When purchasing goods or paying for services, many of us move from one means of payment to another within the space of one day. We might use cheques to pay household fares. However, few financial experts would dispute the fact that some of these methods of payment will soon become a thing of the past. Some experts even believe that one day we could be living in a totally cash-free society.

Smart cards and mobile phones are becoming an increasingly popular way to make all sorts of payments. Even now, in Japan thousands of transactions, from bying rail tickets to picking up the groceries, take place every day with customers passing their handsets across a small flat-screen device. And predictions in the wold of finance reckon that payments using mobile phones will have risen to more than $50 billion in the very near future.

What’s the appeal of e-cash? Compared to cheques or credit cards, if offers the speed of cash, but more so. It takes just one tenth of a second to compete the most transactions and as no change is required, errors in counting are eliminated. Fraud and theft are also reduced and for the retailer it reduces the cost of handling money. Sony’s vision of having a chip embedded in computers, TVs and games consoles means that films, music and games can be paid for easily and without having to input credit card details.

And what about the future of the banks? With their grip on the market, banks and credit-card firms want to be in a position to collect most of the fees from the users of mobile and contactless-payment systems. But the new system could prove to be a ‘disruptive technology’ as far as the banks are concerned. If payments for a few coffees, a train ticket and a newspaper are made every day by a commuter with a mobile, this will not appear on their monthly credit card statements but on their mobile phone statements. and having spent fortunes on branding, credit card companies and banks do not want to see other payment systems gaining popularity. It’s too early to say whether banks will miss out if so, by how much.
However, quite a few American bankers are optimistic. They feel there is reason to be suspicious of those who predict that high street banks may e a thing of the past.
They point out that internet banking did not result in the closure of their high-street banks as predicted. On the contrary, more Americans than ever are using local branches. So, as to whether we’ll become a totally cash free society of not, we’ll have to wait and see.