The handwriting is on the wall when it comes to notes and coins. Though I still carry cash for small purchases, I am increasingly witnessing staff at major retailers struggle to deal with physical currency and making change. Why do we even need cash anymore?
Cash offers certain benefits, such as security. In an era where major data breaches occur on a regular basis, cash is comforting.
There is also the issue of anonymity. While there are many folks who don't seem to mind that their bank or companies, such as Google, Amazon and Apple, know everything about them, there are some who prefer to keep transactions private whenever possible.
Yet, there is something to be said about the speed and convenience of electronic transactions. With that said, there is a scenario possible in the not too distant future that allows for the best of both worlds: contactless cards.
Contactless cards are EMV chip cards that use near-field communication for proximity payments. You don't have to insert your credit card chip when you make a purchase. You simply tap the card instead. Visa — along with most other major card issuers — offers a contactless card, and the company's advertisements are spot on. Contactless cards offer an easy, convenient way to pay for anything.
However, the concept isn't new. Think back to the open stored value card experiments of the 1990s. While the idea didn't take off then, the timing and technology are finally ready to make this concept a reality. A contactless “cash card” that delivers tap-and-go convenience, along with the enhanced security and anonymity of cash, will be beneficial for just about everybody.
Because of cash, current ATMs are essentially large, heavy boxes with mechanical devices for accepting and dispensing paper money. These machines require regular servicing and advanced physical security measures, like safes, locks and barriers.
There are also major costs associated with cash transport and handling, as well as the lost value of the money when it is locked up inside the ATM. All of these factors contribute to the substantial expense of deploying, managing and maintaining an ATM fleet.
Now imagine how the equation changes if we don't have to worry about physical currency, only e-cash. The ATM can shift from dispersing notes to loading value on stored value cards. This would allow consumers to spend e-dollars just like they spend paper bills, only faster and easier, with no loose change in their pockets.
This would also align with shifting consumer preferences. A quick review of payment data from the past 50 years clearly indicates that the general population has embraced electronic transactions of all sorts — credit, debit, prepaid, phones and more. The trend will only continue.
Is this scenario likely to happen? There are a lot of factors at play here to be sure. Most countries still have significant amounts of paper currency and coins in circulation, so there would be many legal and regulatory issues to address. There is also the massive and deep-rooted infrastructure already in place to handle cash that would need to be considered
Even so, given the realities of how consumers have embraced the ease and convenience of electronic transactions, along with the growing cost of dealing with paper notes and coins, it is only a matter of time before e-cash supplants paper money, and ATMs adopt to the shifting landscape.