This article was first published in the July edition of Media Pulse – Omnicom Media Group’s monthly highlights on relevant media insights, intelligence and trends.
Two countries on opposite sides of the world are currently in an arms race to become the first “cashless” society on the planet, and they couldn’t be more different. Both Denmark and the Philippines are passing legislation that encourages consumers and businesses alike to dump their notes and coins and go electronic. It’s been two years since mobile banking overtook web banking with smartphone penetration in Danish households nearing 80%. Is it a pipe dream, or is it a realistic goal to think someday in our lifetime we’ll be using apps or even our faces to pay for goods and services?
The e-peso is the Philippines answer to the cash problem. Bolstered by an initiative backed by the government, USAID, and the country’s big banks, the ultimate goal is to turn the island nation into a “cash-lite” economy by 2020. This could be a tall order for a country in which 98% of all retail transactions take place in cash, and only 26% of citizens have access to formal financial channels.
And then there’s Scandinavia. Denmark, in particular, sees a cashless future as early as 2016 (yes, next year) thanks to tabled regulations that seek to make it legal for retailers to refuse cash currency. The flipside is that cash currently accounts for only 6% of Denmark’s purchases, and an inherent trust in technology by citizens goes a long way toward making the goal a reality.
Two different markets, using cash in a completely different way – so why the move toward a “new normal”? And they’re not the only players in the cashless arena; everyone from Rwanda to Great Britain are testing the waters through governmental regulation and third-party e-payment platforms. No matter which nation goes coinless and cashless first, the bigger unanswered question remains: is it actually a good idea?
While proponents argue for increased transparency, traceability, and security through e-payments, doubters point to cyber threats and the marginalization of current cash users like the poor and the elderly. Is it fair to require people to use a mobile app or a line of credit to pay for goods when they may not be able to afford a smartphone?
High income countries are currently the most likely contenders for going cashless, averaging about five e-payment transactions per week, per resident. And they’re also already the most likely to be targeted for cyber-security hacks. But as emerging markets like the Philippines adopt mobile usage at record rates, the opportunities for cash-free transactions grow, too. And where do marketers fit into the puzzle? Well, imagine paying for coffee with a scan of your phone and instantly receiving a rebate on a croissant. Want to donate to a local charity? Your e-payment comes with a handy-dandy click of a button for writing off that donation, too. The reality is, cash is no longer king. Going cashless is… well, easy. In fact, we may soon live in a world where bitcoin have more cache than Benjamins… but what will we sacrifice if we do?