While the talk of cashless society from 10 – 20 years ago never materialised, it does seem to be on the horizon realistically now.
Quick debit card 'could replace cash' | 24dash.com – Bill Payments
A new payment system being trialled in the UK could remove the need for people to carry cash, according to a report out today.people simply pass their debit card across a sensor, in a similar way to how Oyster cards work on the London Underground, for the payment to be verified and the completed in about half a second.
Key components of the evolution, seem to be:
- focus on small amounts (micropayments)
- contactless
- no PIN
These attrubutes are all interconnected, and its the combination thats driving success.
The first attribute makes the business model focussed on being cheap to implement, therefore cheap to offer. Thus it provides mass market appeal, which is the only way elimination of cash makes sense. The second is all about convenience. When you want to buy a cup of coffee its got to be as simple as sticking your hand into your pocket/ purse and grabbing some coins. Lastly, its critical there is no pin to complete the convenience cycle. Contactless becomes inconvenient if you have to wait for he POS response, then type in your PIN.
Thus the combination of these three attributes will drive cashless / micropayments success.
Transactions made using the system will be capped at £10, with people having to sign or key in a pin for anything above this figure. But there is no lower limit on payments made in this way, meaning people could use their debit cards just to buy a newspaper or a bar of chocolate.At least two other banks are also understood to be planning a trial of contactless payments before the end of this year.
The system is already popular in the US and parts of Asia, following trials in 2002 and full commercial launches in 2005.
The US is currently the biggest market for contactless payments, and at the end of the first quarter of this year there were around 10 million devices for using the system, including plastic cards, key fobs and miniature cards, in circulation, accepted at more than 30,000 outlets.
The system is also used in Malaysia, Taiwan, Japan, South Korea and Singapore.
There has been little development in Europe to date, mainly because card issuers have been focused on the migration to chip and pin technology, but Datamonitor said developments were only around the corner.
The group estimates that the value of the global market for contactless payments could be 724 billion US dollars (£393 billion).
Technorati Tags: payments, micropayments
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