Cash vs. mobile payment

About the future of payment solutions

«For how much longer are we going to pay by cash?» The Swiss magazine Marketing & Kommunikation asks experts to voice their opinion. Reto Gross, Netcetera's Associate Director Payment & Card Service, thinks that cash payments are not going to die out in the near future. First, the industry needs to make cashless payment more secure, increase convenience and reduce the complexity of the transactions.

Thesis of the magazine MARKETING & KOMMUNIKATION:

Low interest rates and rising bank charges are again making cash more attractive. Cash will remain the default means of payment at checkout counters for a long time to come. For online shop checkout, credit cards will continue to be the preferred means of payment. Any mobile payment system that wants to become more than a niche solution needs to fulfill three requirements: 1. It works at every checkout as easily as cash. 2. It is based on standard credit cards. 3. It rewards users with added value or a cost benefit.

Commentary of Reto Gross, Netcetera's Associate Director Payment & Card Service:

Security, convenience, broad use and privacy protection are more important than interest rates or fees. Relevant innovations need to provide at least the same benefits as cash. In the best case they provide additional benefits for all parties. And precisely because many payment innovations do not take these criteria seriously and ignore the needs of users, cash will remain king for longer than intended. Writing its obituary is premature – but that does not make it immortal.

Speaking of obituaries: It is impossible to imagine e-commerce, mobile payments and POS transactions without the "Grand Old Payment Lady", declared dead years ago: the credit card. Its global success story has nothing to do with the plastic card as such, but rather with global standardization and agreement on a few – mainly two – provider networks. Overall I would love to see a bit more imagination when it comes to means of payment. Limiting the scope of use to POS payments and e-commerce is not good enough. Rather, payment flows need to be modeled with a broad brush because the boundaries between bank transfers, ESR invoices, direct debiting and standing orders, as well as payment transactions per se, are increasingly blurring. This applies equally to mobile payment. Although the multi-party system of debit and credit card providers is prone to relatively high fees, this fundamentally open system does ensure that the payment providers cannot act in a proprietary way.

Users do not necessarily expect a cost advantage from their preferred payment method, but they are not prepared to pay a surcharge. The added value comes from having a commonly accepted, functional and secure standard means of payment which can be used both quickly and easily. Unless the industry manages to improve security (for example by using biometric identification), improve convenience (possibly through wearables) and reduce the complexity of user login and the actual transactions, cash payments are not going to die out in the medium term.

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