In recent months, I have travelled through Europe and into the UK and spent time again in London.  I reflect on my ‘mission’ to spend a year without cash and yet it increasingly seems so hollow.  It is simply so meaningless to call out a time without cash when the reality is that we can easily function in this state.  This is not the problem.

I recently spent time at a function arguing with someone about going cashless, when in reality the ‘opponent’ agreed with my position by stating that he did not use cash!  My assumption was that in his industry he was a natural cash converter when the reality was not the case.

However, let me reflect on a challenge that conflicts with my social conscience, and hopefully yours:  I was in New York last week and checked out of the hotel, as you do, many hours before needing to be at the airport.  I left my bags at the hotel porter and went for a lovely stroll around NYC.

It was a very good day in New York and I felt really positive of the time that I was there.  I then realised that I needed to pick up my bags at the hotel and make my way to JFK.  I could not in all conscience pick up these bags and not remunerate that person for the job they had done.  This is a reality of life in the USA.  I had no cash with me (of course). People do not get paid for the job they do and people like you and I end up compensating these people with tips.  It is so inefficient.  It is so degrading.  But it so part of the fabric of American life.  Why?

So despite my principles around cash, of course I did the right thing around the good people looking after my bags at the hotel. I got cash out of the ATM to pay the people that looked after my bags.  And why wouldn’t you?  Except for the fundamental issue around efficiency in business, better employee relations, etc etc … Why is the land of the free and the brave not actually brave at all?

And when we see a debate today about a potential President of the United States that has no respect for anyone free or anyone brave and anyone that is female in this world.  What hope have we got?  None at all is my view but please let us try and start to change this.  Not just for women in this world, but what about all those others that do not get the respect for the job that they do?

My last post was a little while ago and I am prompted to talk again as I jump on a plane to Europe for the next few weeks.

Interested to know what to expect in other parts of the world.  Can I continue this focus on a cashless world if other societies are not so inclined, or advanced?  A potential dilemma, I suspect.  London I have no problem as my last visit was a breeze in the cash less world. Spain?  I am not so sure.  Many countries that have problematic economic circumstances also carry a lot of baggage around the black economy – tax evasion etc, the natural resort for the cash economy.

Whilst it may test my resolve it does not overcome my suspicion of the motives for people to cart cash around the world.  Why on earth would you go to an FX exchange to get your supply of cash before you head off to overseas countries?  Really?  Money laundering anyone?

I must say that I am incredibly energised by this blog.

So many people have said to me that they are moving away from cash and so many have also expressed the implication of the natural transition to a cash less world.

Of course., the real challenge is to understand that the cash less world actually addresses the way we work as a society.  How do we help the businesses that deliver us services become more efficient in their execution.  Should we simply accept the process the business offers or should we help the business to move to the next level?

A case in point.  I fronted up to one business with my mobile phone to make the payment, instead of taking out my credit card.  The surprise was extraordinary.  The comment was similarly placed … wow what is that?  And this was a person that could best be described as a millennial.  Not your standard old type person!  So the next gen technology being offered by an aged person like myself actually drove an interesting response to the payment:  The comment was, wow that is cool!  So here we are – generations driving the divide but importantly we are resetting the agenda for the future of payments.  Now how cool is that!

I have just returned from two weeks in the UK and readily tested the prospect of living without cash.  The upshot of this experience?  I have not only have ceased using cash but I no longer rely on a wallet full of cards.

One of the great dynamics in the payment industry is the rapid evolution of our attitudes to cash.  How often do we see ‘tap and go’ when people use cards at contactless terminals?  Have you experienced ‘Zero Touch’ using Droplet (dropletpay.com) in the UK?  Do you have a phone with Near Field Communications (NFC) embedded in the device?  If yes to all the above, then you have set in train the cash/card/wallet removal from your processing system!

So now that I have returned to Australia having spent 2 weeks in the UK without cash, I have extended my horizons and now no longer carry a wallet full of cards.  I simply use my phone and look forward longingly to the time when Droplet launches worldwide so that I can even dispense with that rather quaint 2015 device to manage my payments.  The great thing about Droplet is that not only do you have zero touch for your payments but your loyalty is rewarded at point of sale.  Your geolocation is noted by the till system at the merchant and you simply pick up your goods and leave.  Payment happens like Uber and you get a message to deliver your receipt.  How easy is that?  No tap – simply go!

I often wonder about the dilemma of managing a cash-less society.  How do we handle the intransigent people that demand their control over the payment system?  These are people that have a vested interest in controlling all matters related to their lifestyle. Surely they have rights as well?

Firstly, I must state that I respect these people and their ideals.  You can do nothing less.

And yet, I ask, what about my rights?, my needs to ensure that all matters related to how I interact with the payments system are managed in an efficient way and ensure that for me, at least, I have a lower cost that those that demand other inefficient means of payment, such as cash. Should people that use high cost payment products such as cash incur higher fees?  That will be an interesting observation!

You know, one of the key issues that we should confront is the economic benefit of managing our society without cash.

I know that there are numerous people out there that love nothing more than to carry coins in their wallets/purses.  I personally don’t get it, but I understand that it happens. Furthermore, there are people that want ‘notes on hand’ to make sure they are quarantined from that awful predicament of being destitute at the point of sale – not being able to pay for goods, in cash, on demand.

But seriously, do we not contemplate the costs on the merchant of carrying the cash to support these efforts?  Have we never thought that demanding cash as a currency is causing the merchant serious costs, and mostly hidden costs?

Let us pause to consider what a merchant has to manage with the range of cash on its premises:

1. Security of cash management
2. Loss and theft from employees at point of sale
3. Reconciliation costs for cash registers, including additional persons to provide a separate point of control for cash counting
4. Personnel management and training of impacted staff

These are but a few of the business overheads that are required to mange cash and protect staff exposed to cash handling.

So the costs are considerable … and the benefits are?

My journey without cash has passed the month of January without any disruptions to my day to day life.  There was one merchant that queried why I used a card for a small $4 purchase, and I simply stated I had no cash.  Other merchants have praised the benefits of contactless as a seamless way of managing the sale process.  Trades people more often than not have electronic payments built into their business models … so no problems there either.  I am looking forward to declining the opportunity to buy fish and chips from our favourite place, as it only takes cash.  One less sale for them … and no doubt some lifestyle benefits for me!

We often see the acceleration towards electronic payments as being driven by contactless, i.e. contactless cards at point of sale that are ‘tap and go’.  And yet, that is not true innovation – you are still touching a device, interacting with a device, ‘tap and go’, it is still contact in some form. True innovation is when we move past the whole concept of ‘tap and go’ and introduce a seamless experience for the customer and the merchant alike.

Let me paint a picture.

What would it be like if you could walk into a merchant, the merchant recognises you from your picture on the till systems, knows what you got last time and spoke to you by name. You’d feel like a real ‘customer’ wouldn’t you?  You would feel special.  What if all you had to do was take the goods you had received, leave the store and your payment was processed directly to your account (bank or card) using zero touch?  You then receive a message confirming payment with an invoice attached?  What if all of this process includes updating your loyalty program with the merchant automatically?  Or applying credits that are due without handing over a loyalty card?

A quiet revolution at the corner of your street? or maybe you are thinking this is a glimpse into the future?

Companies like Droplet (www.dropletpay.com) in the UK are making payments and loyalty work seamlessly through an app, right now.  Droplet offers merchants customer data, behavioural insight, and customer acquisition features that are unavailable anywhere else in the payment or loyalty markets. This isn’t an experiment.  This is real time  with hundreds of merchants and thousands of users experiencing  seamless processing of payments.

The ‘real-world’ mobile sectors are being shaped by platforms that are open to all rather than individual schemes run by different merchants. So are we already there? Emphatically, yes!  The real opportunity is that companies like Droplet are continuing to innovate every single day, so our concept of what the future holds …..?

Well, I have to say, there have been zero problems for me to function without cash.  I have been running this experience for the past 11 days and there has not been a single instance where I have needed cash.  I have been to the local store to pick up a paper, I have been to grocers for veggies, I have been to bakers for bread and on each occasion I have used a card – as you would expect in this day and age!

Mind you – there have been a few Luddites hanging around preaching doom and gloom and the collapse of society as we know it, but … it hasn’t happened!  I know we are only 11 days in but I am guessing that this experience is the standard for the year.  Some have said to me that I will be challenged having a coffee in Europe and yet I really question that supposition.  I have been to many places in Europe and a simple tap and go is the way to pay so I cannot see this as an issue.

The one area in which I am nervous is the visit to the local market.  I went to our local market at Flinders (Victoria, Australia) the other day.  There were stallholders with electronic payment devices to manage POS card payments.  How good is that?  Yes, there were stalls that were cash only but I am guessing this will be the last year for that particular idiosyncracy!

Cash has been with us for thousands of years and yet it has only been in relatively recent times that its usage in the money supply has declined to the extent that it is now such a very small part of the payments system. Electronic payments has been the driver of this change, and the accelerator has been contactless payments.

The role of cash has been reduced to provide for small value payments and to enable the ‘unbanked’ part of the population (those that do not participate in the banking system) to function in the world of commerce.

‘Unbanked’ is a sad reflection on our society.

A Forbes study in 2014 determined that 28% of the US population (88 million people) were unbanked (no use of financial services) or underbanked (minimal use of mainstream financial services, and mainly reliant on payday lenders). Typically, it is the disadvantaged in society that is unbanked or underbanked and these people, according to Forbes, can spend up to 10% of their modest incomes on fees and charges from the likes of payday lenders to provide their source of cash.  This cost does not include the loss of funds through theft, fraud and other risk exposures.

The solution to this reliance on expensive sources of cash will undoubtedly lie in the use of technology and innovation in payment products that enable people to store income and make payments through non-cash and non-bank means such as mobile payments.  We have already seen successful use of mobile payments technologies in Africa (e.g. m-Pesa in Kenya) and elsewhere to facilitate the inclusion of previously unbanked people in a secure payments system.

In developed countries, Sweden is often quoted as a case study in the move towards a cashless society.  In Sweden 70% of bank branches are cashless (contributing to the lowest level of bank robberies in 30 years!).  Currently only 20% of Sweden’s payment transactions are in cash representing less than 3% of the economy.  In the UK, 4% of GDP is cash, Australia 6% and the US, 8%.

The trends in technology provide a very compelling roadmap in the way economies move away from cash to more efficient means of exchange. The experiences in developing and developed countries alike will provide hope for laggard economies, such as the US, that there is a better world ahead.