The death of cash has been a topic of discussion for decades now, but it’s still here. To be honest, it’s not likely to disappear fully anytime soon, if ever. But, there are much better alternatives to paper currency that can and should be used for most transactions. Let’s explore the payment options that have been made available to us over time.
A Little History
As far back as we’ll bother going for this discussion, goods and services were traded for precious metals. Gold and silver coins were the currency of choice for hundreds, if not thousands of years. Then came government-backed paper currency, which allowed people to conveniently carry much larger sums without getting a hernia. The next step in the evolution of currency was the bank check, which essentially allowed one to write their own “currency” backed by their own bank account balance. This system worked well as long as you were able to keep a supply of checks and had sufficient money in the bank.
It really took the invention of computers to get us past these paper-based “cash currency” alternatives. By the late 1950′s, the first credit card as we know it was available. By the late 90′s, credit cards had largely taken the place of checks, and were well on their way to taking the place of paper currency. The “smart phone” is the latest device that promises to turn the whole concept of “currency” upside-down!
The First Wave of Mobile Transactions
Smart phones and wi-fi first started rocking the credit card world by allowing any merchant virtually anywhere to instantly complete a credit card transaction directly from their phone. Fast. Clean. Trouble-free. Secure. It’s truly stunning the number of small businesses that used to be cash-only enterprises who now accept credit cards simply because it is so easy for them to do so. And, of course, because our society has come to expect it!
As convenient as credit card transactions are in this mobile digital age, we can’t lose sight of the fact that they are still a piece of plastic with enough tangible information on them to be a security risk. The risks range from the obvious loss or theft of the card itself, to someone taking a photo of the front and back of the card… to a store clerk surreptitiously scanning the card’s data into their own system… to a store’s system being hacked or intercepted… or even simple old-school writing down your card information. There has to be a better way, and many think that the next wave of mobile phone technology will include it.
The Next Wave of Mobile Transactions
Cutting edge mobile phones now have a feature called NFC or Near Field Communication (read more about it here). NFC allows personal information to be transmitted securely from your phone to the vendor you are doing business with directly without transmitting that information over distance. Sometimes referred to as “tap” technology, it is claimed to be very secure. Some people are paranoid that all a thief would have to do is get close to the purse or pocket that has your phone in it to “sniff” your credit card data, but that’s not how it works in practice. NFC features are turned off when your phone’s screen is off, and NFC credit card access is ONLY active when you have the “credit card” application (like Google Wallet) open and have entered your PIN number. At all other times, it is impossible for anyone to access your information.
Before you dismiss this as a fad, consider that over $100 billion dollars changed hands using mobile technology in 2011, and $170 billion is expected for 2012. By 2016, over $600 billion per year is expected! Cash might not be dead yet, but this could very well be the near-death of “plastic”.
What should you do?
As a consumer, you should carefully embrace the new technology. You don’t have to be an “early adopter”, and you certainly should be skeptical and address all of your security concerns via trusted sources. But, if you can carry less cash, not carry credit cards, and securely handle most of your transactions with nothing more than the phone that you already have attached to you like an electronic leash… it just makes sense to do it. Unfortunately, you won’t be able to completely abandon cash until the government backs some sort of electronic solution that is universally accepted. Until then, you’ll need cash for small, casual, personal transactions at the very least. And you’ll probably have to carry a credit card “just in case” until NFC becomes widespread and universal, as well. (or for when your phone battery dies!)
As a merchant, you should absolutely embrace the new technology. Anything you can do to make it easier for customers to purchase from you is nothing but positive. It allows you spend less of your time on the transaction. It allows your customer to do the same… and it often makes them less cognizant of how much money they’re spending with you, which can sometimes be good for you. So, if you’re not already doing NFC credit card transactions, call your credit card merchant account provider and ask about it! And if you’re not accepting credit cards yet… get with the program, you’re probably losing business to those who are!
Contact Fredrick James Today to learn more about how you can leverage credit cards for both personal and business use.
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