In the digital world, it might seem counterintuitive to rely on cold, hard cash for incidental expenses. After all, given our concerns around safety, how much money do we really have in our wallets at any given time? The old saying goes that cash is king, but that is starting to change in Africa where money has started taking on more digital forms.
Much like the paperless office, the cashless society is something that has been long in coming to fruition. Given the growth of cryptocurrencies (refer to our feature last month) and mobile wallet solutions, the days of using cash might soon be a thing of the past.
Picture this typical scenario. You are stopping to buy bread and milk on the way home from work but must use your debit or credit card as you do not have the cash on you. This is not only frustrating because it takes an extra minute or two to process, but you are also incurring unnecessary bank fees. Fortunately, there are already more efficient ways of performing these micro-transactions.
The growth of mobile has resulted in exciting new opportunities for us. Sure, being able to post to <insert your social network of choice> wherever you are and to access virtually any kind of information from the palm of your hand are incredibly powerful ways of navigating the digital world. But what if you can use your smartphone or tablet as a wallet solution?
Mobile wallets are of course nothing new. Launched in Kenya in 2007, M-Pesa has grown to be one of the largest mobile phone-based wallet solution in the world. By the end of last year, the platform had grown to almost 29.5 million active users in ten countries. Initially launched to provide basic banking and money transfer facilities to people who did not have bank accounts, it has expanded with additional features that touch on virtually all elements that would until recently have been considered the exclusive domain of banks.
New smartphones ship with RFID and NFC functionality that enable users to hover their device over a reader at a pay point and have the transaction instantly deducted from their account. These contactless payment solutions are typically limited to transactions of less than R 200, but the benefits are obvious.
However, mobile does not only have to be limited to your phone. In Egypt, for example, the government is working with MasterCard and the Egyptian Banks Company on a project that will enable its 50 million citizens to use their ID cards to link to a mobile payment gateway to transact with one another.
Loyalty and reward cards are other illustrations of retailers looking at different ways of managing the payment experience. It is all focused on providing consumers with a convenient and secure way of transacting without worrying about carrying cash with them or using their traditional debit and credit cards.
Even in estates, cashless environments are on the increase. With everything from gyms and hospitals to retail outlets and grocery stores available, some estates have become more welcoming of cashless payment methods that link to a centralised resident account. Whether it is through a contactless system or a mobile device, payments happen quickly.
The biggest challenge in the move towards a cashless society is not overcoming a technological issue but rather a human one – that of a different mindset. One of the key concerns many people have with these digital platforms is a lack of trust (what happens to your virtual money when the card or phone is lost or stolen?). And then there is also the small matter of making sure retailers embrace these new payment methods. Having multiple solutions to use at the myriad stores you go to will quickly become frustrating and counteract any of the benefits you might have experienced.
Yet, in developing user-friendly solutions that provide convenient digital alternatives to cash and banking cards, companies can steadily work on changing public perceptions. With mobile money transactions in sub-Saharan Africa alone expected to exceed $ 1.3 billion by 2019, the tide is turning in favour of these digital solutions.
“A cashless world isn’t that far off. In several global markets, mobile payments have already surpassed cash, becoming the preferred payment method. The evolution of smartphone technology has proven to be an integral influencer in the way we transact. It enables consumers to make everyday purchases in a safer, more convenient way,” said Will Heygate, Head of Zapper Marketing South Africa.
For the time being, it is not going to be the one or the other. Mobile (and digital) solutions will work complementary to what is available until the tipping point has been reached. As more retailers and other organisations start embracing other cashless methods of payment, so too will consumers start using them for the convenience and security they provide.
“Society is transformational and change is inevitable, which we have seen by the surge of mobile payments in South Africa. Considering the benefits of this innovative payment solution, it is no surprise that mobile payments will ultimately replace its less rewarding predecessors.” notes Heygate
Change will not happen overnight, but it has already started taking place in pockets around South Africa and the rest of the continent. The question now is whether you have started using it already or are still sitting on the fence in anticipation of demand. Irrespective, we are in the midst of a cashless revolution. How much you want to embrace and benefit from it will depend on you.