Disappearance of Cash: Time for transformation
This year’s World Payments Report from Cap Gemini and BNP Paribas revealed that, in 2014, global non-cash transaction volumes grew by 8.9% – more than at any other time over the previous decade. In one way or another, we have all felt this change, if only through the gradual disappearance of cash from our everyday lives.
Since 2010, cards have been the fastest growing payment instrument, and although it is likely that this trend will continue, new and innovative solutions might soon become the main drivers behind the growth of non-cash transactions.
As populations are elevated from poverty, living standards raise, and the unbanked enter the banking system. Emerging Asia and China are at the forefront of non-cash transactions uptake. For now, debit and credit cards remain the number one choice everywhere in the world.
With smartphones’ penetration rapidly increasing, mobile payments become more and more popular, adding to the growth of non-cash transaction volumes. Whilst cash remains an important feature of the payments landscape for the near future, its gradual decline will be brought about more so by immediate payments, than by cards.
The World Payments Report points to cultural factors, as well as no added costs, upholding cash as a popular payment method, especially for low-value transactions. In the era of constant connectivity via smartphone, mobile payments have the potential to successfully replace cash, bringing non-cash transactions to traditional trading venues such as open air markets, or hawker centres. While installing a card terminal might still be an investment out of reach for many micro and small businesses, a QR sticker is the only prerequisite for accepting mobile payments through apps such as Liquid Pay.
Retail consumers were the first to dive into the world of immediate payments, with a third using their mobile devices for payments at least once a week. However, Cap Gemini highlights a slow uptake among corporates. Adoption is expected to remain low, and to improve slowly with the introduction of value-added services.
The report makes it clear that the adoption of immediate payments largely hinges on the cost of updates that integrate these systems into existing infrastructure. It is worth noting that Liquid Pay operates parallel to the traditional banking system, giving it an unusual potential not only for high adoption rates, but also virtually unlimited development.
Key industry and regulatory initiatives as well as market education are all major factors in enabling the transformation from card payments reliant on the traditional banking system, to immediate payments facilitated by the technological advance of recent years. In Singapore, the MAS is currently in the process of researching a new payments framework which would help create a business conducive environment for fintech companies. Liquid Pay remains in constant dialogue with regulators across the board to ensure compliance, and take an even more active part in shaping the mobile payment future.