For thousands of years human society has revolved around the concept of giving hard currency in return for goods.  In this transaction is the innate human recognition that this is both fair and up-front ie you pay the seller an agreed price and you shake hands on the deal. Both parties walk away satisfied.   Since the widespread introduction of payment cards in the 1970s, many people have predicted the death of cash as the payment method of choice.  Yet forty years on and this is yet to be the case.  In fact as recently as 5 years ago, seven out of ten transactions were still cash deals*.

Although the use of payment cards (p-cards) has increased exponentially over the last few years, there are key reasons which hold its total domination back – namely anonymity, availability and security.

Anonymity

Consumers are rightly concerned that P-cards do not offer the anonymous transactions that they may wish to make.  People do not like to be monitored and are suspicious of an organisation’s reasons for doing so – will they end up on someone’s database and constantly spammed? Will their buying habits be monitored and sold? Would their physical movements around the country be monitored and stored for information purposes?  To overcome this natural fear of an invasion into what we consider our individual freedoms, banks and P-card providers will have to guarantee that there would be no misuse of information.

That said, it is true to say that the use of P-cards can provide businesses with exactly this kind of data, which can prove vital to the expansion of the corporation.  In fact leading retailers Tesco and Marks & Spencer have already introduced self-service tills where customers have to pay by plastic.  Ultimately, the deciding factor on the point of anonymity will be to provide a balance between the rights of the consumer and the needs/desires of the vendor.

Availability

If P-cards are ever to overtake cash as our preferred method of payment, their availability both in terms of enfranchisement and usage needs to be universal.  In other words there would be little point in a decisive move away from cash if certain members of society didn’t qualify for P-cards, or if some smaller shops didn’t have the facility or desire to accept them.

To address this, payment card providers are increasing the types of cards available and the types of transactions they cover.  The Oyster card is one example of this.  Instead of processing thousands of micro cash transactions, the London Underground is now regularly paid for by the Oyster payment system by many Londoners.  Once systems such as this are in wide circulation, it’s only a short hop before corporate dynamics dictate a more widespread usage across London shops and attractions etc.

In addition, Mastercard now has a version of the pre-paid plastic cards which are hugely popular in the US - CashPlus.  You don’t need a bank account to use CashPlus as Mastercard brokered a deal with the Post Office allowing customers to charge up their cards at any of its branches.  This type of card encourages inclusion into today’s shopping and banking tactics by targeting those in society who may not have traditional bank accounts – such as the elderly, students and the unemployed.  Initiatives such as this are going some way to ensuring the fair and universal reach of P-card transactions.

Security

Tapping our PIN numbers, ID numbers and passwords at shops and online can sometimes be a risky business. Where there is security – there will always be someone ready to undermine it.  Over the years, large businesses including banks have suffered security breaches which caused the theft of customer private data.  However, with the introduction of PCI DSS regulations in 2005 and the creation of the PCI Security Standards Council (made up of representation from AmEx, Discover, JCB, Mastercards and Visa) in 2006, P-card providers have tightened the net considerably.  This has meant that any providers who fail to comply or choose not to, face heavy penalties and may even be denied the right to process transactions altogether.  In fact the use of payment cards has become the more secure way to pay for and monitor transactions for both the consumer and the providers.

At the moment we are standing on the threshold between payment methods of the past and those of the future.  The move towards greater use of plastic is increasing in pace and economic dictates will ensure that the move away from cash will happen eventually.  In fact, the only legitimate explaination for the continued widespread use of cash is that vendors are also consumers and, for reasons already explained, our affection for cash remains.  However economic forces invariably win in the end, and with the introduction of E-money, together with payment cards, it is likely that we will see an end to cash as a mode of payment within our lifetimes, ending a centuries old tradition in all but the most remote of countries and regions.

* Source: Apacs