Sunday, July 15, 2007
Cashless future is a dream for the Internet
Futurists have often told us that "cash is dead" and that one day we will all love without it. Indeed, the beginning of online payment systems led many of them to predict the end of cash as we know it, with all transactions being conducted online. The futurists have yet to be proved right.
When cheque payments were introduced there were, no doubt, that this meant the end of cash. But cheques have been with us since ancient Roman times. And even though today sees the end of the acceptance of cheques by the London Underground, we have yet to see them destroy cash.
The London Underground is an interesting example, back in 1990, cheques represented 87% of all non-cash transactions for the tube travellers. Now it is just one percent. Far from cash becoming unpopular, it's cheques that are disappearing.
Over a decade ago, NatWest pioneered trials of Mondex - a card that would replace cash. The whole of Swindon was set up to take the card payments instead of cash. The trial ended because people preferred cash - in spite of the apparent safety of the card. So, if cheques are disappearing in favour of cash and if cash cards like Mondex don't receive the popular vote, how likely is it that cash will disappear?
Cash has been with us for centuries - the Chinese even had paper bank notes as far back as the 600s - yes more than 1,400 years ago. Cheques are a comparative modern invention and clearly they are dying out before cash. Cash has a psychological effect which cheques and other forms of money do not have. With cash you can see how much you have got; you can feel how much you own. Having cash makes you feel as though you have money and serves as a feedback mechanism for self status in a way that online transactions do not.
PayPal owners often log onto their account just to see how much they have - even if there have been no transactions since the last time they logged on. It's just to see how much they have. Equally, online banking has seen a similar effect - a whole load of "lurkers". People who log onto their account but do nothing with it. They are simply checking what they have; they are gaining the psychological comfort of their worth, no matter how small it is.
So what does this mean online? It suggests you cannot stop accepting cash payments. Even though online transactions are largely based around credit cards and PayPal, it may well be worthwhile even accepting cash send by post. Web site owners tend to focus on the new technology without considering the way that people actually use money. Cash is important for all of us, so perhaps we all ought to consider accepting cash online as well.
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