In just a few decades we’ve gone from using traveller’s cheques to Apple card, from chip-and-pin to contactless. The way we pay for goods and services has evolved, transforming our payment experience for the better – and it’s set to change again. Bringing a host of new benefits for consumers and businesses as the Internet of Things (IoT) eradicates our use of cash.
A growing market
The total transaction value of remote payments is expected to exceed $6 trillion by 2024, a growth rate of 53 per cent from 2019. This will be fuelled by the rise in connected devices such as smartphones and wearables, that makes paying for goods without cash incredibly convenient and quick.
Many countries, such as Sweden, are leading the way in cashless policies. Demand for coins and notes in Sweden has fallen dramatically, by 27.5 per cent over four years. Instead, Swedish consumers are increasingly reliant on debit and credit cards, contactless technology, payment apps and even RFID chip implants.
Less-cash before cashless
Some predict that a completely cashless society won’t become commonplace in the near-term. However, societies will transition to less-cash, where cards and contactless dominate.
Cash is expected to remain as a payment instrument for the foreseeable future – although its denominations may change. As fewer consumers use cash, some experts advise that governments should phase out high denomination notes and solely focus on smaller bills.
The benefits of IoT-enabled payments
There are many benefits to a cashless approach. Tax evasion will fall as IoT-enabled transactions will provide greater transparency. Governments will have enhanced abilities to track transactions, making it harder to ‘trick the system’. Thereby increasing tax payouts to the Government, with a knock-on impact on public services.
Similarly, crime will become more difficult. Paper currency cannot be easily tracked, which facilitates corruption and crime. But in a cashless society, the criminal business model will have to be re-designed. There’ll be greater risk of detection. Plus, if there’s less cash going around muggings and burglary will decrease.
Switching to a cashless (or less-cash) system will also reduce the cost of handling cash. From ATM fees to cash storage and transport costs. IoT-enabled payments will do away with a significant amount of this and the money saved will be re-distributed as public funds, disposable income and business growth.
Amazon Go: cashless IoT in action
The in-store experience will also get a refresh as consumers no longer face lengthy checkout lines to pay for goods. Indeed, the checkout may disappear completely, as illustrated by Amazon Go. Amazon’s cashless convenience store uses IoT cameras and sensors to track purchases as customers walk around the shop. When they leave, they are automatically charged for the items taken with them. Without having to wait in line, use a self-checkout or talk to a cashier.
This approach doesn’t just boost customer satisfaction, but also the bottom-line. An estimated $37.7 billion is lost every year when customers leave a store because of long checkout lines.
A richer future
The IoT will empower people to pay for things in a convenient and safe way. Without fear of losing cash, the added expense of carrying money and time lost waiting for checkouts. With society paying in a smarter, cashless way we’ll have more time and, ultimately, more money.
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