The push toward a cashless economy is already well underway in some parts of the world. India’s prime minister issued a ban on the largest currency notes late last year, for example. The result of that action was an 86 percent reduction in paper money.
Other countries have embraced their own cash-free campaigns. Cork, Ireland, launched a three-month pilot project to become the country’s first cashless city. Likewise, Sweden, Belgium, Denmark and Norway are on their way to becoming less cash-centric nations.
Cutting cash means consumers must find another way to pay. Digital payments quickly become a go-to option. The “Cork Cashes Out” initiative boosted digital payments by 522 percent. On the other hand, card transactions only saw a 17 percent lift.
While cash in the U.S. isn’t going anywhere anytime soon, digital is shaking up the payments landscape. Below are a few ways cash payments are being disrupted by digital.
- Cash-only retail options upgrade – Startup company PayRange has introduced a way to let vending machines, laundromats and other automated retail devices accept digital payments. The technology uses a Bluetooth dongle to connect to the Internet and a digital payment network. “This technology eliminates the need to rummage for loose change before using a vending machine or laundromat,” said Brian Day, director of digital payments products at CO-OP Financial Services. “For people on the go, this has the potential to transform their purchase experience.”
- Nonprofits embrace digital – A recent survey revealed that 40 percent of transactions related to nonprofit contributions involved cash. With the introduction of digital wallets, more consumers may opt for alternative payments. Blackbaud, a software company serving nonprofits, has already introduced Apple Pay to a number of its clients. Contributors to the American Red Cross, the American Heart Association and others can now make automatic, recurring donations through the Apple app. “Convenience like that may have the power to shift consumer behavior from cash to digital,” noted Day.
- Simplified person-to-person (P2P) payments – An estimated 75 percent of transactions transferring money to other parties still involve cash. With new options joining heavyweights like Venmo and PayPal in the P2P space, there may a significant shift in consumer behavior ahead. Up-and-coming P2P network Zelle promises to usher in that change. “Zelle offers the convenience of real-time payments without the need to share account details,” said Michelle Thornton, manager of core products at CO-OP. “Two people transferring funds won’t even have to be connected to the same banking network.”
- New digital shopping experiences – An estimated 52 percent of cash payments relate to food and personal care supplies. With the advent of “click-and-collect” shopping experiences, more consumers may purchase their must-have grocery and personal items online. Retail behemoth Amazon has already redefined shopping with its “Just Walk Out” technology and AmazonFresh Pickup. “Although purchasing patterns won’t change overnight, more and more consumers are adapting to the convenience of shopping with just their mobile phones in hand,” noted Thornton. “It may not be long before digital wallets are more prevalent than physical ones.”
As digital payments grow in acceptance with consumers and merchants, cash may take a back seat to cards soon. This provides credit unions with new opportunities to deliver fast, convenient and secure digital payments. CO-OP’s full suite of solutions offers customers the flexibility to meet their members’ needs today and in the future.