Is Cash On The Way Out?

By Andrew Willink
20 August 2008

Some people love paying with cash. But other people hate it simply due to the inconvenience it causes by having to lug around heavy coins and dirty notes everywhere you go. With the emergence of the credit card as the most popular method of payment worldwide, cash has been relegated to small-value purchases such as bread and milk. For some people, that’s not enough. Becoming a cashless society may be more convenient, but will it ever eventuate?

Introducing the PayPass
New developments in the credit card industry suggest that we may be one step closer to making that a reality. MasterCard’s PayPass system also known as Tap’n’Go is a new, cashless way of instantly paying for items under $35. With a Mastercard PayPass credit card, all you have to do is tap the card against the PayPass reader at the checkout, and the transaction is complete! It’s a quick and simple way of paying for low value items and there is no signature or other checks required.

If a particular store doesn’t have PayPass, the card functions as a normal credit card, allowing you to sign for a purchase. Although only a small percentage of retailers currently have a PayPass reader, more will be added to the service in the future and you will start to see PayPass becoming prominent at the check out. 

Pay with your mobile
With the emergence of contactless credit cards, mobile phones may be the next progression. The Commonwealth Bank has already run a trial of a mobile phone payment technology called near field communication (NFC). Fifty MasterCard PayPass mobile phones were given to attendees at a golf tournament at Huntingdale, Victoria. Those with the phones used them to purchase food, drinks and even souvenirs throughout the tournament. The system works in the same way as a PayPass credit card – the phone is tapped against the PayPass reader at the checkout and the transaction is complete (see related links below).

Commonwealth Bank Executive General Manager of Credit Cards, Stephen Karpin commented, "This is exciting technology with huge potential applications, from shopping at the corner store, to paying at a ‘drive thru’ to accessing sporting events.”

Is cash on the way out?
While for the immediate future it won’t replace cash, it is feasible that at some point PayPass, or systems like it will become the new standard way to pay for anything from a loaf of bread to a new plasma TV. What happens to ATMs at that point is anybody’s guess, but for consumers the move away from cash will no doubt have its advantages along with its disadvantages. Some people too, will not give up cash easily. And while we may be some time away from becoming a cashless society, the persistent move towards that end is inevitable.  Twenty years from now we may not need a wallet at all – just a money clip for all our plastic cards.

Related Links

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