Simon Black, CEO, PPRO Group

A woman waves her smartwatch at the automated barrier to gain entry to the train. When she exits she will do the same and her fee will be automatically calculated. Apart from the one-time set-up of her account, she has nothing else to do; no ticket to order, no card to carry, no ticket to fumble for or lose, and most importantly no time wasted. This is the present reality for early adopters and will be the norm for everyone else in the near future, not just for purchasing tickets, but for any of our everyday transactions. And it will mean the end for cash.

A recent Lloyds Bank survey^[1] revealed that a quarter of Brits think that in just five years’ time they will no longer need cash. Payments UK^[2] take a more cautious approach, predicting that the number of cash payments will decline by 30 per cent by 2024. What’s for certain is that we are set on course firmly for the end of cash. We live in a culture of increasing convenience which has influenced and will dramatically transform the way in which we’ll pay for items now and in the future.

A new era of Connected Commerce

Mobile payments will become just one of the many options taken for granted in the future. While it’s still in its infancy, the explosive growth of contactless payments in the past 18 months means that in just a few short years from now, payments via smart devices are likely to be just as commonplace as paying by cash, debit or credit card today. In fact, research from Gartner^[3] predicts that mobile payment adoption rates will catch on quickly, estimating an annual volume and value increase that will average a 35 per cent growth rate, until 2017.

It is vital for mobile payments to be supported by a range of mobile devices in order to encourage steady growth. However, it is also just as important that merchants install the appropriate technology to accept alternative payment methods. For example, retail brands are already reaping the benefits with one in four mobile commerce sales completed through smartphones^[4].

However, businesses and other organisations will also be significant beneficiaries. By being open to accepting contactless payments, retailers can capture payments digitally and acquire data, which can enrich customer experiences, increase customer retention and provide insight that can influence wider marketing activity. The combination of the Internet, smartphones, sophisticated virtual wallets and win/win promotional programmes means commerce will be connected on a scale that was, until recently, unimagined. The effect of a cashless society will lead to Connected Commerce, and the impact to businesses, both large and small, will be revolutionary.

Convenience culture is driving the cashless revolution

It wasn‘t that long ago that we approached shopping online with caution and many of us were concerned that our card details or even our whole identity would be stolen. More and more frequently, value is being placed on speed and convenience, which consumers are willing to make exceptions for and is one of the biggest benefits of mobile payments. Consumers tend to adopt new products, technology or services quickly if they’re simple, intuitive and compelling. It is this culture of convenience that is a major driving force behind the cashless revolution. From using contactless cards to pay for a train journey, quick and easy is winning the war.

This factor, together with retailers installing the necessary technology, has driven the explosion of the use of contactless cards in the UK in the last year, and spending more than trebled to reach a record £2.32 billion in 2014^[5]. UK consumers used their contactless credit/debit cards 319.2 million times last year and 10 contactless transactions took place every second. With 41 million journeys made on the London transport network using a contactless card in the first six months after launch, consumers are now forgoing a paper ticket or their Oyster card (a contactless smartcard for public transport across London). The need to store money on a separate card or queue at machines to top up has been removed.

Contactless is the missing link to the widespread adoption of virtual wallets. Once you are comfortable with waving your card to make payments, it’s a small step to waving your phone or your smart watch. In just a few short years from now, payment via smartphone, smartwatches or other intelligent devices is likely to be just as commonplace as paying by cash, debit or credit card today.

Be it mobile wallets, virtual cards or biometric payments, the world of payments is transforming and cash can expect to slip further down the preference list over the coming years until it will most likely become obsolete by 2025.

[1] http://www.finextra.com/news/fullstory.aspx?newsitemid=27784&utm_medium=NewsFlash&utm_source=2015-8-31

[2] [1] http://www.finextra.com/news/fullstory.aspx?newsitemid=27987&utm_medium=NewsFlash&utm_source=2015-10-15

[3] http://www.gartner.com/newsroom/id/2504915

[4] IMRG and Capgemini’s Quarterly Benchmark https://econsultancy.com/blog/66543-50-fascinating-stats-about-mobile-commerce-in-the-uk-2015/

[5] http://www.theukcardsassociation.org.uk/news/contactless_surgeJan2015.asp