Instant payments and a cashless society have been talking points in 2017. We started to see evidence of the rising popularity of bank accounts for payments due to the introduction of Faster Payments in the US and UK and Instant Payments in Europe. These make it much faster, easier and more convenient for consumers to send money from account to account.
Historically in Europe, with 28 member states and just as many banking systems, it had been difficult, expensive and slow to transmit money between countries. However, with SEPA Instant Payments announced for 2018 it will be easy, fast and cost-effective to send money to any European account within 10 seconds, 365 days per year.
Being able to process European payments instantly from account to account will be a big leap forward towards a cashless society. However, without complete consumer trust in data privacy, in 2018 and beyond, it will still prove impossible to replace cash altogether.
Cash still reigns in regions where banks and governments aren’t trusted. Electronic payments require trust in data privacy because consumers can be tracked and 2017 scandals around the NSA and GCHQ haven’t helped to build that trust.
Trust comes first
As long as consumers have good reason to believe that they will have their privacy infringed, it will be impossible for politicians to introduce a cashless society. Trust comes first.
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By GlobalDataWithout a doubt, the next ‘Killer App’ in the payments sector will be convenience. I know technically, convenience can’t be an app. However, in my view, whomever best captures true consumer convenience will become the next significant disruptor of payments.
We’re already seeing usernames and passwords replaced with biometric authentication like fingerprints, face and voice recognition. Biometrics technology is evolving all the time. It’s becoming faster, more secure and reliable. We can’t forget a fingerprint and we won’t have to type in complex passwords on small touch screens anymore. That’s a compelling offer for consumers. But we must ensure the technology is secure.
Finally, on to cryptocurrencies. These have existed for many years already, however, their lack of success in B2C payments is the result of a lack of trust and convenience. It doesn’t help that criminals of all sizes use Bitcoin for ransom payments. British companies were recently reported to stockpile Bitcoins, mostly for the purpose of paying ransoms to hackers.
Cryptocurrencies are global, secure and cost-effective. However, their reputation is still tarnished and the conversion rate to other currencies is extremely volatile. Bitcoin could build trust if it was regulated and anonymity would have to be replaced by trustworthy relationships with consumers. That, however, is the opposite of what Bitcoin currently stands for. Therefore, cryptocurrencies probably won’t become very popular with consumers, at least for the next ten years or so.
Ralf Gladis is CEO of Computop