Another day, another article about the death of cash. Thistime Ilya Subhankulov, the COO of BTX Trader, writingfor TechCrunch is predicting that Apple pay and digital currencies combinedwill be the end of physical cash.
Apple Pay and digital currency willplay a massive part in changing how consumers perceive — and make — low-valuepayments. The businesses that are quickest to realize this will be the onesthat benefit – but believe me, the days of physical cash are numbered.
It seems every technologist believes it will be their petdigital product that will completely change the world and wipe out everythingthat came before. But just like television didn’t kill radio, and Internetstores did not kill brick and mortar (in fact, Amazon is opening up its first physicallocation), mobile payments and digital currencies will not kill cash.
Cash has inherent advantages that allow it to competeagainst all other forms of payment. The first is immediacy both in terms ofcompleting transactions and establishing value. The value of Bitcoin and otherdigital currencies is too volatile at the moment, and may remain so, given theglobal nature of the currency. Second, cash does not require the assistance ofany system or batteries to complete a transaction. Now, I suppose digitalcurrency devotees could hand thumb drives back and forth, but verifying thetransaction would still require connecting with something else. If a cardsystem goes down, a business can still operate on cash. IF the cash system goesdown, well, then everyone has much bigger problems.
Also, let’s keep in mind that Apple Pay is as yet unproven.While it certainly offers some exciting possibilities, it still needs tocompete in the broader payments world for acceptance by merchants and shoppers.Closed-loop apps and the promises of CurrentC, the MCX app, offer value-addsthat don’t exist with Apple Pay. Beyond that, so far, mobile payments add tothe friction of making a payment, rather than making life more convenient. Doesthe shopper want to stop texting or talking, log into their phone, open an app,log into an app, verify their thumbprint, and then tap or scan a phone, or dothey simply want to swipe a card or hand over some cash. Multiple steps versustwo steps – not that hard to figure out for rational people.
Potential exists for digital currencies and mobile paymentsto combine and provide shoppers with useful and interesting tools. But like inthe same way that e-books have not displaced print (in fact hardcovers andpaperback both outsold e-books in the first half of 2014, according toNielsen), digital currency will not complete replace cold, hard cash.
Overview by Ben Jackson, Director, Prepaid Advisory Service for Mercator Advisory Group
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