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Say hello to Apple Pay and goodbye to cash [Q&A]

Do you think that the goal of becoming a cashless society by 2025 can be realistically achieved?

Yes, I think the goal of becoming a cashless society by 2025 can be realistically achieved. In fact, I am sure that most people in most countries will be comfortably using a smartphone-based virtual wallet by 2025.

This is a revolution that is taking off and will snowball in the coming years, just as we saw with the adoption of mobile phones. Non-cash payments have already overtaken cash payments in the UK, which have fallen from 52 per cent in 2013 to 48 per cent in 2014 and mobile technology is leading the charge in the payment revolution. We are now seeing cases where the smartphone is replacing other items. Sales of iPods, for example, have been falling since 2009 having been superseded by smartphones, which have been subject to continuous innovation and have become highly networked personal computers.

Smartphones are the driving force of technology for connected devices, both wearable and in our home, in cars and even medical equipment. We’re now witnessing the rise of the smartphone as a virtual wallet, with Visa predicting that £1.2 billion will be spent on mobiles by 2020 (which I see as extremely conservative) and Apple renaming its Passport app for storing credit cards and tickets as “Wallet”.

What will be the difficulties in achieving this goal?

The biggest challenge we will face in achieving this goal is consumer behaviour; we don’t change our habits unless we are forced to (for example, wearing seatbelts) or unless there is a compelling benefit (mobile phones went to full adoption incredibly quickly for such a new technology).

Do you think society will embrace the technology, or will people still see more security in physical money?

I think society will embrace the technology - consumers tend to adopt new products, technology or services quickly if they’re simple, intuitive and compelling, without needing extensive education. In the case of contactless, in London it required the card issuing companies to issue contactless cards, retailers to upgrade their terminals, and the card schemes: MasterCard and Visa to invest only a relatively modest amount in communication and education. The biggest driver though was a very clear benefit aimed at the right market. In London, as with any of the world’s major cities, there are millions of workers short of time that are making many small, daily purchases such as coffee or sandwiches, and the notion of tap and go is as simple as it gets. Once all of these measures are in place, society will embrace the technology quite easily and physical money will be seen as cheques are seen today.

What are the biggest benefits of Mobile payments? Why should people choose this service?

More and more frequently, value is being placed on speed and convenience, which is a one of the biggest benefits. It is this convenience culture that is a major driving force behind the cashless revolution. From using contactless cards to pay for a train journey, to a one-click shop on Amazon, quick and easy is winning the war.

What security problems / dangers of using mobile payments are there? How can these be overcome?

Mobile payments will be much more secure than the way we use cash, debit and credit cards typically today. Technology, such as fingerprint ID and tokenisation, is putting much greater protection in place. Apple has stated it won’t store transaction details but security is still an issue that people need to be aware of, especially considering the considerable amount of loss / theft associated with mobile devices and the increase of targeted attacks. This development increases the need for biometrics as a confirmation process, providing customers with an easier, more efficient experience which they’ve come to expect, and which will be a major change within the industry.

What trends in this market do you foresee?

Looking ahead, the plastic format of a payment card will ultimately be replaced by mobile devices – both smart phones and smart watches. While that future scenario is still some years away, what we will see over the next 12 months is the early adoption of using smart phones to pay, in particular through the launch of Apple Pay.

Apple will benefit greatly from its early experiences in North America which can be applied to the launch in Europe. Samsung have a lot of catching up to do but its huge customer base will help this. However, by using the Android platform Samsung will also face more competition for ways to pay.

Simon Black is CEO of PPRO Group.

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