Technology and the end of cash

Paying a friend the tenner you owe them is now as simple as calling their mobile, following this week's launch of Barclays' 'revolutionary' new money transfer application.

The app, called Pingit, gets rid of any messing about with sort codes, account numbers and so on. Instead, it makes it possible to send money by simply using someone's mobile number.

So is this the beginning of the end for cash? Will our wallets and purses soon become virtual?

The threat to cash
Cashless payments are nothing new. PayPal has dominated the person-to-person online payment scene since its launch in 1998. Most Londoners will be familiar with making contactless payments on the bus or tube using Oyster cards - which first arrived back in 2003.

But using a mobile phone to make contactless payments is also becoming more popular, and some would argue that having easy access to all your money on your smartphone will be what finally makes the concept of cash redundant.

Services such as Barclays Pingit are already hugely popular elsewhere. Countries in Africa and Asia have been using similar types of mobile payment tech for years - see, for example, the success of Vodafone's M-Pesa in Kenya, Tanzania and Afghanistan. These are countries where most people don't have bank accounts or PCs, hence the rapid uptake of mobile banking.

One of the experts responsible for setting up M-Pesa is Dave Birch, a director at IT consultancy Consult Hyperion.

Birch is passionate about people using services such as PayPal or Faster Payments Service (FPS) to make daily payments - whether it's paying for the newspaper at the corner shop or settling up with the builder for your new loft conversion.

"If there are some people out there who want to carry on using cheques, I'm not saying that cheques should be banned, I'm just saying that they should pay for them," Birch says.

"Similarly, in the future, if there are some people who want to carry on using cash then that's fine, but they should pay for it.

"Generally speaking, if you could press a couple of buttons on your phone to send money instantly to the school, builder or friend then you would," says Birch.

Giving Pingit a test run
If you are already a Barclays customer, then you can download the bank's Pingit app for your smartphone right now to give it a test run. Customers at other major UK banks will be able to use the app at some point early next month.

The app moves money using the aforementioned FPS, so transfers are pretty much instantaneous. The ease and speed of the service have led Antony Jenkins, chief executive of Barclays retail and business banking, to say that Pingit is going to "revolutionise the way people send and receive money".

"I'm sure we'll soon be wondering what we did before it," he adds. But is this really the final nail in the coffin of paper money?

"Credit and debit cards have played a big part in the move towards a cashless society, but even they may be phased out as people receive, make and manage payments via mobile devices," says Martin Ott, chief executive officer at Skrill (Moneybookers), one of Europe's largest online payment systems.

"Plus, in the last few years, smartphone adoption rates have risen dramatically and, by the end of 2012, it is said that there will be more mobile phones than people in the world.

"A challenge for mobile payments has always been ease of use. But this is changing very quickly too."
PayPal on the end of cash

Too much choice?
The idea of mobile payments raises thorny issues of security and trust.

But one of the biggest barriers is likely to be confusion over the proliferation of lots of new, competing mobile payment apps and services.

"A cashless society is inevitable," says Roelant Prins, founder and chief communications officer of Adyen. "But it's really the complexity of other payment options that is going to cause concern in the future.

"Every region has preferred methods of payment but the breadth and variety of these is already astonishing. The future will be about choice, not cash."

Gabriel Hopkins, head of eCommerce products at WorldPay, foresees a rapid uptake for mobile payments. "The commute home from work may soon overtake Monday lunchtime as the peak time for online business," he says.

"This is where the future of payments gets really exciting - eWallets and NFC capabilities on phones will add a new dimension to paying using a mobile device. In fact, the UK mobile payments market is expected to be worth £2.5bn by 2016."

By that time, you might have ditched your wallet or purse altogether. "Tech is making an indelible mark on the way we pay for things," says John Lunn, EMEA director of innovation at PayPal UK.

"At PayPal we envisage shoppers being able to hit the high street in 2016 without needing to carry a wallet.

"Cash won't completely disappear but we will increasingly use our phones and other mobile devices to pay for goods in-store and online.

"The lines are already beginning to blur between traditional bricks and mortar stores and their online channels. Over a million PayPal customers have already sent a payment from their mobiles."

Are you ready to go cashless?
But not everybody is convinced by reports of the death of cash.

"Despite all the marketing money being thrown at contactless technology by international card schemes their efforts have failed to create any interest among the UK public," says Ron Delnevo, a director of the UK Payments Council and managing director of Bank Machine.

"The appetite for contactless payments from British consumers has always been, and remains, one of the lowest in any European country.

"It is becoming clearer by the day that contactless payments have entirely failed to make a connection with UK consumers, who simply prefer cash."

After all, we've been using cash for a heck of a long time. That's going to be quite some habit to break.

"Cash has been around for over two thousand years," says Dr Andrea Donafee, managing director of Cash Management Solutions. "It is a trusted, instant way of resolving debt - it doesn't require a password, never runs out of battery, and is accepted everywhere.

"Despite the huge rise in credit and debit card payments over the last 30 years, the amount of cash in circulation in the US has increased five times over.

"And cash is still king here in the UK: Christmas Eve last year broke records for ATM withdrawals. Those predicting the end of cash are the same people who first predicted the paperless office in the mid-70s!"