Money, as they say, makes the world go round. But the type of money spinning us around is increasingly digital and plastic rather than paper. Every week seems to bring new developments from different corners of the globe that indicate we are inching ever closer to being a “cashless” world.
The last few months in Europe has seen much associated with the topic come to the fore. It was recently announced in the UK that cashless payments have exceeded the use of physical money for the first time ever. This came hot on the heels of an announcement from the Danish government that businesses such as retailers, petrol stations and restaurants will soon no longer be obliged to take cash payments.
These are just a couple of significant milestones, but they are clear signs of a genuine shift towards a cashless society around the world. But who is driving this change and what does it ultimately mean for consumers and businesses?
The crown is slipping
While economists debate whether cash will ever be completely eliminated, its days as king of payments are truly over. This new era of smartphones and wearable tech are arguably the final (and biggest) nails in the coffin of cash’s reign. But what’s most interesting about this trend is that the drive is coming from several places. The move away from cash isn’t some carefully coordinated project of financial institutions and governments, it’s as much being driven by software engineers, start-ups and entrepreneurs.
A start-up in San Francisco, London or Stockholm is as likely to influence consumer and business financial habits as much as (if not more than) the finance minister of a major G7 nation. Globalization has raised pressure on small businesses to adapt new technology and change how they function to meet customer expectations.
Start-ups are driving this and a smart piece of software that allows a small business owner to take bitcoin or a customer to pay with the wave of a wrist is going to be just as important a driver as any government led initiative to enhance productivity, limit tax evasion or frustrate criminal economies.
The ongoing mass adoption of smartphones (it’s been predicted that two billion consumers worldwide will own one by 2016) and wearable tech will only accelerate the metamorphosis to a cashless world. As more and more small business owners and consumers buy into the cashless option, the wheel turns ever faster.
Not only is the cashless movement being driven by various groups in different ways, it’s also a trend moving just as fast in developing nations as it is in developed nations. In North America and Europe we often forget about the significant mobile payments and mobile banking ecosystems that have emerged across places like Latin America and Africa.
What’s fascinating is the cashless motivations are different here to what they are in the West. Weaker broadband infrastructure has led to mobile becoming a far more practical option to carry out tasks and duties that in other nations would be carried out via personal computers.
As a result mobile has enabled millions of people to have access to services that allow them to save and spend their money. In places like South Africa it has effectively brought banking to over 15 million people for the first time.
Such has been the public taste for cashless, that start-ups, banks and telecoms are scrambling to claim pieces of the lucrative pie as it continues to spread across the continents of South America and Africa.
We therefore have a global cashless culture rising, but for a variety of reasons and with a huge mix of players behind it.
A new world order
The march to a cashless world will not be driven by governments or even major financial institutions. It will be led by start-ups, tech engineers and the men and women on the street who respond to their products.
Sure, government policy will play a part (and most governments are more than keen on supporting the concept), but it will be more to help smooth out obstacles or bureaucratic resistance rather than in a leading role.
Banks obviously have a role to play, but mainly as facilitators. Their sheer size and scale mean they lack the agility and speed to innovate in the way tech start-ups can. As a result they will adopt, utilize, support and build on the solutions and ideas built by others. The way telecoms and start-ups, rather than banks, have led the mobile money revolution in Africa is a classic example of this point.
What’s exciting is that a driving philosophy of so much of this movement is the concept of “financial inclusion” – ensuring the tools needed for a business to thrive in a cashless world are as accessible for the sole trader as for the megacorporation. It’s exciting to be part of a dynamic movement adapting technology to level the playing field for small businesses.
The cashless revolution is in full motion. Governments, business owners, banks, start-ups and consumers may all have different motivations for knocking the crown off cash, but the ultimate result will likely be the same.
But in a globalized world where big is traditionally beautiful, it’s the smaller players – start-ups, small businesses and consumers – who will ultimately shape the new world order. And for those who love innovation and fresh thinking, that can only be a good thing.
Full details on all of the Technology Pioneers 2015 can be found here
Author: Jacob de Geer, CEO iZettle, a World Economic Forum Technology Pioneer