A world without cash is coming. Financial institutions that aren’t ready with a strategy for the impending e-conomy could wind up as dinosaurs.
Americans are increasingly eager for a purely digital economy as their use of cash continues to dwindle, according to the results of a survey released today by MasterCard. The survey, which asked over 1,000 participants for their two cents the growing trend towards a cashless society, gives a snapshot of Americans’ shifting views and behaviors with electronic payments.
The Frustrations of Cash
Cash is inconvenient. Most Americans experience some sort of frustration when dealing with physical payment instruments — whether that’s trying to get a vending machine to accept a crumpled bill (63%), waiting days for a check to clear (40%), waiting for people to find exact change (40%), or finding the time to get to an ATM (29%).
Time to Kill Cash?
Consumer use and acceptance of cashless payment tools is now widespread, if not the preferred payment method. Three in four Americans (73%) say they use less cash today than ten years ago. Could the U.S. kill its paper currency? Probably not today, but soon. Canada just eliminated its penny, which apparently cost 1.6 cents to make, and hardly anyone made a peep. The U.S. one-cent piece costs 2.5 cents to produce — hard to justify in a penny-pinched world. Once all that annoying loose change disappears, bills won’t be far behind.
Gen-X More Ready for Virtual Economy than Gen-Y
Despite the widely held belief that Gen-Y is always the most receptive to all things digital, MasterCard’s survey actually found that it is Generation Xers who are the most willing to abandon cash.
Members of Gen X (ages 30 to 39) — those who came of age during the advent of electronic banking, online shopping and are now in the midst of the mobile wallet revolution — are most in favor of paying for everything electronically. The majority favor a world in which they wouldn’t have to carry cash (61%). A significant portion (44%) of members of the baby boomer generation (age 55 and over) also favors a cashless society.
Digital Wallets Are the Future
There are a multitude of competing mobile payment solutions duking it out for the wallet of the future. It seems everyone is playing in the digital payments space somehow — from the usual suspects like Visa and MasterCard, to newcomers like PayPal and Google. Big banks like Barclays have also been consistent pioneers, developing one new payments innovation after another.
Lilliana Vazquez, a stylist in New York and participant in the MasterCard survey, is one of those consumers who has made the shift to mobile payments and now embraces “tap and pay” technology. “Having to stop to get cash out of an ATM or dig for money in my huge handbag slows me down and that’s never a good thing in my business,” she explained. “I thought being able to swipe my credit card was the ultimate in ease, but now all you have to do is tap and go — talk about convenience.”
Nicholas Lee, from EZ-Link Contactless in Singapore believes in the future of electronic payments over cash. “So, moving forward, if you look at projections from around the world in terms of mobile commerce, the wallet in the phone is well-positioned to really be the catalyst to move contactless payments or cashless payments in a very, very big way.”
ABC News has reported 94% of bills carry bacteria, yet only one in two Americans (51%) admit that they typically wash their hands after handling money.
Cashless Twitter Promotion
On the heels of its survey, today MasterCard also announced a “Cash Less” sweepstakes which asks the question: “I find myself using cash less because…” Stories will be gathered via the Cashless Conversations blog and on Twitter using the hashtag #CashlessConvo. 15 winners will receive $50 prepaid MasterCard cards.