because cash is inexorably becoming redundant.[From I'm dreaming of a cashless Christmas – Telegraph]
The cashlessness meme appears to be spreading, if our broadsheets are any barometer.
Reports of the death of cash have long been exaggerated… Yet it is slowly edging closer with debit card spending set to overtake cash spending, by value, for the first time in 2010[From Cash remains king but here comes the new wave – Times Online ]
I thought that debit spending had overtaken cash spending a couple of years ago, but it doesn't matter. But the meme has spread even further. Every morning, the BBC flagship current affairs programme Today (the staple of the middle classes in Britain) has a daily segment called Thought for the Day where they get religious people to reflect on some important issues of the day. This is when most people go and clean their teeth or put the kettle on, but I accidentally heard it this morning and even that was about cashlessness again!!
[£10 note] will have been exchanged for good or ill a thousand times – in itself a promise to pay the bearer, not gold (not since 1931 has it been gold) – but the paper note nevertheless carries the promise that the currency is secure. [From BBC – Thought for the Day, 5 January 2010]
A thousand times? I doubt it. If it gets used once per day, that's over three years but the life of a £10 is only about 18 months (I'll check with the Bank of England to see if I can find the up-to-date value). Anyway, I digress again. I shouldn't let my e-cash autism derail the narrative.
But it's increasingly rare that our financial transactions are made in cash. We exchange money on paper or with plastic, online and with these easy transactions, we can become detached from the morality of what we are doing when we don't feel the weight of the money ourselves.[From BBC – Thought for the Day, 5 January 2010]
This is a point that I've heard from time to time in discussions about money, and it is in fact true, in the sense that experiences from around the world show that the average spend on cards is higher than the average spend on cash. I was talking to Rene Batsford from EAT, the UK quick serve retailer and he said clearly that the introduction of contactless led to a measurable increase in average ticket size overcash. But is that a moral issue? I think we're getting to the very edge of the Forum envelope hear, but perhaps for the 2011 Forum we'll have a session on the morality of money if enough people tell me they're interested in it.
So who wants to get rid of cash? Is it technological determinists with a glint in their eye (eg, me) or just nutty futurologists? Well, no. It's also banks. In Ireland, 2010 will see some bank branches going cashless.
National Irish Bank has written to thousands of its customers this month informing them of a “new style of banking” in which branches will not handle over-the-counter cash transactions.[From National Irish moves to cashless banking – The Irish Times – Tue, Dec 22, 2009]
You have to admire their marketing people: "a new style of banking". Excellent. But I'm on the same page. If I ran a bank branch, I wouldn't touch cash with a bargepole. It attracts the wrong sort of people: drug dealers, tax evaders, money launderers, corrupt politicians, the poor. But if you keep all of them out, then who is going to be using the branch? I never, ever, go to my bank branch. In fact, I don't think I've been there for the last five years.
So is this the beginning of the end for physical banks? Not necessarily. In the U.S., branch expansion is a major trend. In Australia, local community banks (and, conversely, private banks) are all the rage.[From The Future of Money | Fast Company]
Actually, I think the issues may be unrelated: whether banks can think of anything to do with branches or not is not really contingent on the existence of cash. If the only purpose of a branch is to handle cash, then it's not got much of a future, but if the purpose of a branch is to provide services that just don't work online, it might have more of a shot. I remember my son being genuinely surprised when I told him that we had to actually go to a bank in order to open an account: he thought we were just going to text them or something. And he's the future.
Yesterday I needed cash and was not near a branch of my bank. I ended up using a another bank’s cash machine and paid a $5 fee! At that particular moment, I made the right decision. My nearest bank branch was twenty minutes away and I was running late. Twenty minutes was worth more to me than $5. But I can not justify participating in such an arcane banking system.[From Banking for luddites | Free exchange | Economist.com]
As I say, if that's all that branches are, a sort of museum for financial services, then they are going nowhere. But I can see that different kinds of banks with different kinds of services might be able to make something more of branches, which is why I'm so curious about the connection between community and money. This will be one of the topics I'll hope to discuss at the BarCampBank London on 30th January 2010 at PayPal UK in Richmond. We've almost 30 people signed up already but are hoping to get a few more, so if you want to take part in an "unconference" about the future of banking, you can see who will be co,ing along and sign up here. Since a key part of the BarCamp experience is not having an agenda, I have no idea what other discussion streams will form, but here's a couple of suggestions:
- Micropayments. We don't seem to be getting any closer to a simple, universal micropayment scheme for the online world. I still can't press the "red button" that says "pay this website $1". Surely we could boost the economy by finding one.
- Identity is the new money. What are banks going to do about national ID cards, OpenID, 2FA, biometrics and other identity-related opportunities.
- Community banking and currency. One of the key memes for 2010, how to "conventional" financial institutions responds to these potentially disruptive changes that build on consumer distrust and dissatisfaction.
- Unbundling in payments. Couldn't we use new technology to separate the mechanism for exchange, the payment guarantee, the fraud management and so on to provide new kinds of payment services to retailers.
Anyway, it will be a fun way to have interesting discussions with new people. See you there.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]