Today, a similar group of people are hanging by their fingernails to the hope – albeit desperate – that cash will survive. Yes, today cash is legal tender just as salt and shells were in times gone by yet the wonderful thing about the world that we live in, is something called progress.
An article published by Which in the UK (19 January 2021 – Finextra) reported with shock and horror that 34% of people were unable to pay with cash at certain retailers. Hooray I would say and add to that why on earth has it taken so long. Further, ATM withdrawals in the UK are down 37%. Encouraging signs that eventually people are coming to their senses. Cash is dirty, it is inconvenient, it is expensive, and it is a major security risk. In parts of the world you can lose your life for 20 bucks! Further, it is the easiest channel for illegal activities, money laundering and funding of terrorist activities and the sooner we can get rid of it, the better for everyone.
EXCEPT – the financially excluded. As someone once said to me long ago, it is a fundamental birth right that everyone has a bank account – and why not at birth. One has to not only be financially included but digitally included if you are going to survive in the future (not too distant) world.
I remember as recently as 16 years ago being told by a CEO of a major bank that no-one would ever do a payment on a mobile phone. I was also told that the technology of mobile banking would be a major barrier to older and less literate people. My argument – put a person’s salary/wages/grant into their digital account and they will learn very quickly how to access it and use it.
FSPs, challenger banks and other innovative traditional banks recognise the massive opportunity that this brings on the issuing side of the equation – i.e. signing up new customers and giving them the digital tools to pay. The disruptors today are in the acquiring space – i.e. places that will accept the digital payments. Millions of retailers/merchants do not have the tools to accept digital payments and are as excluded as the 2 billion plus unbanked people on the planet. Today, simple mobile phones become the acquiring device for secure, convenient and low cost transactions. No more hardware, no more maintenance, no more paper rolls.
In India today, 1/3 of households use digital payments and that includes 25% of the poorest 40% where smartphone ownership is at 68%.
What makes this digital take-up work: removing cash for the good of everyone; government commitment to a cashless society; mass acceptance by all retailers of all sizes both physical and online. The technology is not the problem.
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