As we tap towards a plastic future, we must count the cost of being cashless
Service sector will be hit by unprecedented change, writes Simon Rowe
The penny hasn't dropped yet for many Irish consumers, but cash is king no longer. The era of a cashless society is fast approaching and you can bet your bottom dollar - if you can still find one - that paper and coin-based payments will become a thing of the past within a generation.
The service industry, for example, is entering an era when the phrase 'keep the change' will soon become redundant. However, change of another sort is coming, but in a different form, and at a relentless, unstoppable place.
That's the verdict of industry experts and is backed by the evidence of trends and surveys.
Such an unprecedented move away from cash will have positive and negative repercussions.
The convenience of contactless payments is a massive boon for consumers, obviously. But a cashless society may come at a cost.
What will the future hold for street beggars and buskers who rely on loose change from passers-by?
Will church plate and church gate collections lose out in a cashless society, or could they benefit from receiving larger donations by moving to electronic payment technology?
What about bar staff who rely on loose change in their tip jars to pay their bills?
The drive towards a cashless society is mainly coming from three sources: governments, consumers and financial institutions. For governments it saves minting, printing and distribution costs, as well as removing the danger of counterfeiting and money laundering.
For businesses, cashless transactions reduce costs and the hassle of managing paper and coin-based income. The technology also reduces security risks. For consumers, cashless technology provides instant access to banking facilities and enormous convenience.
With a little encouragement, Irish consumers are making the switch away from cash. Increasingly they are using debit cards as an alternative to cash, new research shows.
Figures from the Central Bank show there was a 14pc rise in the value of spending on Visa and MasterCard debit cards in retail outlets in March, with a €2.7bn spend. This amounts to an extra €331m transacted on debit cards.
With over 35,000 Irish businesses offering contactless payment facilities, consumers are continuing to make the switch. The Central Bank too is continuing its campaign to turn Ireland into a cashless society by encouraging its own staff to stop using notes and coins by having a cashless HQ in Dublin's docklands.
The massive growth of fintech, peer-to-peer money and digital wallets is changing how people think of money.
Some 60pc of Irish people believe that Ireland will become cashless in the future, with a quarter of 'Generation Z' believing this will happen in the next 15 years, according to findings from Core Media.
'Digital natives', or the so-called Generation Z - those aged between 16 and 21 - will help push new payment options and a tipping point will be reached when they come of age, start jobs, and see their need for banking coincide with their fluency in emerging technologies.
Globally, Scandinavian countries are leading the charge towards cashless societies. More than half of Sweden's 1,600 bank branches neither hold cash nor take cash deposits. Sweden's equivalent of the Big Issue has launched a scheme with tech firm iZettle that lets sellers accept payment by card on their smartphones
Norway's biggest bank has also called for a cashless society.
The Israeli government has strategies in place to eliminate cash from the economy altogether. South Korea is already one of the least cash-dependent nations in the world. It has among the highest rates of credit card ownership - about 1.9 per citizen - and only about 20pc of Korean payments are made using paper money. In Kenya about a quarter of its GNP is through mobile payments app M-Pesa.
Many EU countries have capped the amount that can be legally paid in cash, and India recently withdrew 86pc of its paper money in a bid to eradicate tax evasion.
At home, Cork launched a pilot initiative last year to promote itself as Ireland's first cash-free city. The 'Cork Cashes Out' campaign sought to highlight the benefits for both consumers and businesses of going cash-free. Supported by banks, it led to a 500pc increase in the number of contactless payments in a three-month period.
Shane Doyle, strategy director at Core Media, said the growth of new payments technologies will affect every market, category and brand.
"Our research shows it will become increasingly important for brands to consider opening transaction channels through relevant platforms. As new payment technologies increase, consumers will no longer have the simple choice between cash or card - they will have many other options at their disposal. Businesses will have to follow suit and engage with platforms such as Apple Pay.
"While Millennials - those born between 1985 and 1994 - may be the first to adopt mobile wallets, but Generation-Z is the Irish generation who will lead the real change," said Doyle.
Sunday Indo Business