Is a cashless society just around the corner?

Atos recently launched their study entitled “Ascent Journey 2016: Enterprise without boundaries. It’s a unique report written by Atos’ Scientific Community – a grouping of 90 of the companies leading experts. It presents their predictions and vision for technology that will influence business through to 2016 and beyond. One of the major debates this report challenges is the idea around whether a Cashless Society is just around the corner.

Here to discuss this is Guy Lidbetter, CTO of Atos Global Managed Services.

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Firstly Guy, give us an outline of how this study came about?

With Ascent to Journey 2016, we looked at and identified 4 global trends that we believe will have an impact on society. Also we looked at trends within the way IT is delivered and consumed by enterprises and by consumers alike. We addressed four trends around business and technical challenges.

There were demographics around the shift in which people are interacting with each other and the influence they are having on a much wider basis than ever before. This is through the connectivity of social networking etc.

Closely aligned to that is trust, because the more people are engaging and the more activity that is going on in a digitally connected world then the greater the amount of thought needs to be given to trust and the associated topics of privacy and security.

We have looked at economic sustainability, which really brings sustainability into the commercial area in saying that sustainability in itself is important but we believe that it has to be viable.

Finally if you bundle all those together we see a growing influence of what we call globalisation, so all this stuff is happening now on a macro level rather than maybe the local level that it started at. So, if you take the 4 drivers, demographic, trust, sustainability and globalisation within that one of our topics of research (and we have 13 different tracks that address different elements of that model) was cashless society.

In particular cashless society that is driven by mobile payments and the emergence we believe, in different markets of different demographics of people that we believe will feel far more natural in utilising the technology to do things that have historically been based on more traditional methods of payment like cash, cheque and credit card etc.

Also what we will see in an emerging economy where there is maybe less of a cultural adherence to a particular payment method. I believe, and I count myself in this, that we quite like having the pound and we still quite like having the use of cash and the adoption of mobile payments and NFC near field type payments has not been as fast as it might be. We believe the adoption will be faster in emerging economies where they don’t have those cultural barriers.

What are the main areas of technology that will be driving this move to a cashless society, you mentioned NFC payments which most of us are familiar with now but what else might push the change?

NFC near field communications, where you can just brush your card against a payment machine for a micro payment of perhaps £10 or less is one area because what you are doing obviously is improving the speed of the transaction. We have moved to chip and pin, which is quicker than signature, but you still need to do the pin. Whereas if you can get it to more of a swipe and go type behaviour then you are creating the user experience that can or might encourage adoption.

My observation is that I have seen terminals in shops and I have even tried to use them and it still doesn’t come naturally both to the people to pay using that method and to the people in the shops that are actually offering that payment, you know “Oh well it doesn’t work I don’t know why that is, just use your card in the normal way.”

We saw those sorts of solutions come in a number of years ago so it shows that it can take a slow burn time before it becomes acceptable and natural as a standard way of payment.

The other one is really around mobile. Mobile can mean a mobile phone but an example I use here is almost like mobile payments by stealth. I don’t say that in a nasty way to pull the wool over people’s eyes, but it is because people are using mobile in a natural way to acquire a service.

An example we use is the Kindle, where people have associated their payment details to their accounts and quite naturally download books it pay for them by hitting the button, go, done. That has created a much more fluid means by which that payment can take place when you compare it with maybe 20 years ago, go to book shop, buy book, write cheque etc etc.

How about the importance of the emerging Asian markets, how is the growth in these areas affecting this argument?

We observed that you will have less ties to traditional payment methods and also Asia is known to be a very early adopter of new technology. Put those together and we see that the use of mobile and cashless are being easier to deploy into those markets. You also have emerging economy’s which traditionally have not had heavy infrastructure already deployed and in place. If cashless becomes the only method of payment that they have then obviously they are going to use it more naturally.

There is an element here of human nature at play surely. We do like to have something tangible, in our hand to exchange for something else don’t we?

I think in terms of the way that we have presented it we have shown the demographic trends between a more reticent western culture and those digital natives coming through and adopting the cashless sort of payment method more naturally. These digital natives, once called the Generation Y are becoming the new generation of the workforce in companies that we all work with. They are far more in tune to social networking, to the ways in which they interact, they are less interested in email and more interested in social interaction with each other on the web etc. We feel this generation will be far more in tune to making these sorts of payments in the future.

What are the benefits to the economy of a cashless society? For example, I’m thinking about the situation we have had this year in Cyprus and earlier Greece. Both of those are very cash driven societies – could a cashless society have eased these situations?

Thinking about the Cyprus situation, which is obviously a terrible situation for people to be in if you put your money in what is supposedly a safe place you end up in various discussions. I think these are not new discussions they have gone round many times, cash under the bed is worth more value to you than putting it in the bank. I can’t speak directly as being an expert on the particular specifics of the Cyprus situation but obviously we read the papers and look at the news. Benefits I believe are that it just makes the whole economic process simpler and easier and it should be possible to keep more on top of what you are spending, where you are spending, how you are spending. There are benefits to governments in terms of may be taxation and there must be a basic cost of maintaining a cash based infrastructure. The whole infrastructure of printing, distributing, collecting and destroying money represents a material cost. Also, consider the fraud and thefts that can take place with physical money.

Looking at that situation from a consumers point of view, if you have a situation like we had in Cyprus and you’re living in a cashless society – you can’t very well run down the cashpoint and pull out all of your money to save yourself can you?

You can’t but I think you make the point that even though we are cash based society I don’t think many of us walk around with more than a fraction of that cash actually in our pocket and it is still electronically held in the bank until we release it. So I don’t see how that changes. In the cashless Cyprus situation instead of not being able to go to the cash machine they just wouldn’t be able to make any on-line payments but what is really different is that the bank still will not let it go for whatever reason.

Well it’s a fascinating subject and it is interesting to imagine a culture using money through technology in different ways. What sort of timescales is your report putting on the cashless society?

I think in terms of us talking in the emerging economies I can foresee that happening in a generation window. Are you going to come back to me in 2060 and check whether I was right, I guess not probably but I can see it happening and may be even quicker, you know sometimes these things can just take off and we have seen that in various quote on quote on technology based revolutions n the last 20 years. Twenty years ago there was not internet, no email, no social networking, look where we are today. Things can move very quickly when you get a momentum behind them.