[Dave Birch] If we look around at the current payments landscape, it's important to note just how slow the replacement of cash by e-payments is. Yes, cash is steadily falling as a share of consumers' retail payments, but it is falling slowly. Now, as has been discussed over on the Digital Money Blog, a significant barrier to the replacement of cash is the POS density. In other words, the general public would be happy to use e-payments in a much wider range of transactions but there is no infrastructure for them. This occurred to me this morning, when my youngest son had me hunting around the house to try and find a chequebook so that we could pay the deposit on a school trip for him. We couldn't find the chequebook, so I gave him a note committing us to pay and hoped that would do. Why I couldn't just PayPal them I don't know. This then caused me to reflect on the fact that the school accounts for 9 out of every 10 cheques we write, and this then reminded me about Carol Coye Benson's observation on the same topic:
On Saturday, I was at the Middle School, manning the snack booth for the regional band competition. I did pretty well - over 50 sales! But what fascinated me was that three people asked, somewhat plaintively, if I took debit cards… They were all young moms.
[From Maybe Cash Really Is Going Away? — Payments Views from Glenbrook Partners]
In this case, you have consumers who want to use e-payments rather than cash but they cannot because of lack of infrastructure. There are other areas, though, where consumers are irrationally discouraged from using e-payments. Ireland, for example.
Ireland has historically had a policy of such usage, and the government has actively discouraged electronic payment until recently by taxing citizens for using debit and credit cards.
[From The Financial Services Club's Blog: In Ireland, it's cash or cheques only]
This needs stern action! Perhaps the Irish government should stop using cheques itself, as the Nigerian government attempted to earlier this year.
Dankwambo yesterday directed all commercial banks in the country to dishonour any cheque instrument drawn by Ministries, Departments and Agencies (MDAs) from January 1, 2009, because they have since been warned to desist from the practice.
[From Guardian Newspapers]
It seems to me that we need innovation on both sides of the equation: we need a way to get more e-payment terminals out amongst the general public (two words: mobile phone) and we need a way to discourage the use of expensive cash and cheques (when we cannot explicitly charge for cash without causing major media and consumer pushback).
But is cash going away and being replaced by debit cards -- whether those debit cards are bits of plastic or inside mobile phones -- really the end point of the current curve? I suspect not, and my obsession with paleo-futures backs me up. The July 24, 1968 Sun-News (Las Cruces, NM) ran this piece by Jack Lefler about the possibility of a cashless society.
Some bankers envision nationwide system In which a single identification card would be used in place of all checks and almost all cash.
[From Paleo-Future: A Cashless Future Society? (1968)]
There's something in this, isn't there? As I have often heard, once the problem of identity is solved, then the problem of payments becomes much easier. I pointed out a couple of years ago that it was already possible to see ID cards being used to make payments. Perhaps the future demise of cash has something to do with advances in the world of identity and authentication rather than advances in the world of payments!
it is our view that there is a misunderstanding on what it means a high risk merchant account. Tradidionally banks and card asociations relate this to industries such as gambling, adult pharmacy and other. Yet truly the risk of a merchant account is measured as how each individual business owner manages his business, and respects and provides goods and services to its costumers
Posted by: ipspdotcc | 06/17/2009 at 03:02 PM