Is a plastic bank note the real future of money?
Last week saw the introduction of the new 5 pound note into UK circulation. The morning TV chat shows had a field day with this topic, as this note is a bit of a departure from other notes; this one is plastic. Not quite the digital-age money we expected, but a move forwards none-the-less.
The notes were officially released in England and Wales on Tuesday, but it’ll be a while before they’re in the hands of the general public; several banks have reported that it’ll be around a month before they arrive in local branches. One branch explained that, as most ATMs dispense £10 and £20 (set to go plastic in 2017 and 2020 respectively), there won’t be many banks feeling the need to stock up.
The new notes are incredibly durable. Unlike former currency, which was susceptible to sogginess and tearing, the polymer design allows for bending, pulling, and dipping in liquids with ease. Mark Carney, Governor of the Bank of England, was all over a London market during the press launch, dunking the note into just about every liquid available. Resembling not so much the future of cash - more the future of hob-nobs.
Over 30 countries use similar notes, including Canada (since 2011) and Australia (since 2001). If anything, the arrival of plastic money in those countries sounded the death knell for cash transactions. In Canada, an August 2014 report from Canadian Business found just 10 percent of consumer transactions used hard currency. The Reserve Bank of Australia found that in 2013, cash accounted for just 47 percent of all transactions. Here in the UK, the Payments Council found in 2015 that 52 percent of transactions were electronic.
Talking of electronic payments - and by electronic I am making a giant leap to contactless - new research from PaymentSense shows that we’re more likely to be overcharged when we pay using contactless technology than any other way. It found around 53% of shoppers were overcharged when using contactless payments compared to 41% when using cash. The research also found as many as 15% don’t request a receipt, so we’re even less likely to notice we’ve been charged incorrectly.
PaymentSense set up an experiment in London to check how good we are at spotting being charged the wrong amount. The pop-up coffee stall accepted contactless payments but deliberately entered the wrong amount into the card machine. In some cases, the stall charged £28 for a £2.80 coffee. Being overcharged is often be a simple mistake, but in some cases devious servers may try to inflate your bill you so that they can lift the money from the till.
You might be particularly vulnerable to this in a pub, bar or restaurant, when you are distracted especially if the server takes the card and taps for you. Their advice - don’t give your card to a third party and pay attention to the amount when paying. Not rocket science is it? Still, another piece of research got coverage so we shouldn’t grumble.
Which brings me to the news that Apple Pay is now available on the web since the release of iOS 10 last week. Apple Pay officially launched in-browser to iOS 10 customers using Safari last Tuesday, with a desktop launch for macOS Sierra users scheduled for this week. Customers can pay via a buy button on the page, and will verify the purchase through Touch ID or a tap on their iPhone or Apple Watch.
Payment information and setup will still be completed on a customers’ mobile phone. But based on existing and emerging partnerships, it’s likely the new offering will scale quite quickly, which could help push more people to mobile wallets. A variety of companies working in the P2P payment chain have already announced their offering since the release of iOS 10.
For instance, Circle for iMessage, enables anyone using iOS 10 to send and receive social payments without fees to anyone in the world directly within Apple’s iMessage. Users can send dollars, euro, pound sterling and bitcoin to anyone directly inside of iMessage, and can fund payments and cash out using almost any bank in the US, UK and, soon, Europe.
This is not new, though, China pioneered this trend. Through their dominant WeChat product, Tencent has for years supported social interactions, payments, games, media sharing, merchant services and other app experiences within the WeChat messaging app. In China, WeChat does not resemble an “app” so much as a container for other apps — a de facto operating system.
Companies like Tencent and Alipay also led the way in demonstrating the power of social payments integrated within messaging and commerce experiences. Half a billion people in China use social payment apps on a weekly or monthly basis, and have leapfrogged what we in the West think of as “retail banking” and “checking accounts” toward a world that depends increasingly on messaging digital cash.
But unlike China where social and P2P payments represent a ubiquitous consumer behaviour, we in the West are still in the early stages of social payments adoption. And just as the integration of payments with messaging in China led to explosive growth, many believe that the deep integration of consumer payment experiences with messaging will likely define the retail finance franchise of the future.
So, what REALLY represents the future of payment transactions? Payments through the phone, P2P through social media, or a bit of coloured plastic, whose selling point is that you can leave it in your pocket when you wash your jeans?
I’ll leave that one to you…
Steve Atkins
Contactless Intelligence
