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Cash dethroned?

When accessible, inclusive options exist

By O.B. Rawls IV used a frictionless app regularly or at least occasionally.
Paysafe Rising frictionless app usage will likely support the
growth of contactless in the United States. Consumers
he U.S. market has been slow to embrace con- will be able to enjoy contactless' comparatively frictionless
tactless payments, and biometric and even payments experience, including the convenience of being
voice-activated payments are far from wide- able to literally "tap" their debit or credit card without be-
T spread. Indeed, less than half of Americans (45 ing dependent on an ATM visit.
percent) are comfortable with even the idea of using a
smart speaker to buy goods or services by voice, according The end of cash would also allow retailers and restau-
to Paysafe's first quarter 2019 research. However, there's rants to save themselves time and, by extension, money.
no question that payment choice – at the checkout, in-store The advent of a cashless society would end labor-intensive
and online – is top of mind for consumers. cash processing for merchants as well as trips to physi-
cally deposit cash at banks and financial institutions. With
This brings us to the bigger question around the most diminishing numbers of consumers using cash as a pay-
prevalent U.S. payment method – cash, which dates back ment method in restaurants and stores, the ROI relating
to the early years of the republic. Is cash heading down to this investment of labor and time resources continues
the path of extinction? It's true that Americans are carry- to trend ever lower. For merchants and payment service
ing less – $42 in 2018 versus $50 in 2017, according to our providers (PSPs) alike, cash is more difficult to track than
research. When, and even whether, the United States will digital payment methods in the retail space such as cards
finally go cashless requires further analysis. and mobile wallets. A move away from cash towards con-
tactless and Apple Pay and other mobile wallets would
Cashless benefits provide merchants, PSPs, issuers, the card networks and
the wider economy with more accurate data.
Consumers and merchants share the same essential pay-
ments preference: they favor payment methods that are Significant players in the payments industry would also
frictionless – simple and easy to action. For in-person benefit financially from a shift from cash to cards. Indeed,
payments, whether it's in a restaurant or hardware store, the current growth in contactless cards in the U.S. market
cash's principle benefit is that it involves less friction than is expected to drive an estimated $2.4 billion in incremen-
cards when contactless points of sale (POS) are not avail- tal sales, according to A.T. Kearney. Much of this increased
able, only EMV. revenue for acquirers, issuers and card companies would
relate to card processing fees. However, research suggests
The United States is behind the global curve when it consumers tend to spend more liberally when using cards
comes to contactless. Our 2018 consumer report revealed than they do with cash: spending as much as 83 percent
that only 3 percent of Americans had made a contactless more, according to 2018 research from ValuePenguin.
card payment in-store in the last month compared to 54
percent of British consumers. Also last year, only 3.4 per- Downsides of cashless
cent of American cards in circulation were enabled with
near field communication (NFC), the technology allowing Certain benefits are obviously a question of perspective.
contactless payment, according to research from A. T. Ke- The shift from cash to cards will see retail merchants
arney. incurring increased processing expenses. However, if a
merchant were to become completely cashless, this spend
However, that was then, and this is now. And 2019 is al- would almost certainly be more than offset by the loss of
ready looking to be the year of contactless' American roll- labor and time costs associated with cash processing and
out. Visa CEO Alfred F. Kelly forecast that there will be depositing. Philadelphia's move to ban cashless retail in
over 100 million Visa NFC-enabled cards issued by year- July was mostly driven by high-end cafés and restaurants
end. In addition, in May the New York City subway un- seeing no business need to support America's oldest pay-
veiled tap-to-pay turnstiles for contactless cards across ment method.
the system. When the UK's London Underground made
a similar move in 2014, it proved to be a major catalyst for It is revealing that more exclusive retailers choose to dis-
contactless' wider adoption. pense with cash. After all, lower income demographic seg-
ments tend to favor this payment method because of their
In tandem, U.S. consumers are becoming more used to limited access to credit cards and other mainstream finan-
frictionless mobile commerce through apps like Uber and cial products. Indeed, a significant cohort of U.S. consum-
even Starbucks' cashless Mobile Order & Pay. Close to a ers have no bank account: 6.5 percent of households are
quarter (23 percent) of consumers we surveyed in 2018 had completely unbanked, according to the FDIC's most recent
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