How do mobile payments affect the role and value of cash and cards in different contexts and cultures?

Today, we perceive a strong preference for cash vs mobile payments for significant transactions. The reality is a bit different. It took Western countries decades to switch from cash to cheques to credit/debit cards. If you want to buy a car in France, you should be asked for an endorsed bank cheque. It could be quickly done with mobile payment if the proper security checks were implemented. The same thing is happening in Africa and the Middle East. With the proper security implemented, mobile payments can replace cash, just like cash has been replaced by cards/bank cheques in Europe.

The adoption of mobile payments and its impact on the role of cash and cards depend on a complex interplay of technological, cultural, regulatory, and economic factors. Successful integration requires a complete understanding of these elements to address the unique dynamics in each context and culture

Mobile payments are still niche and for low value transactions. There is still much to be developed regarding security and trust in this type of payments.

Today's payment landscape is not cash OR mobile, debit OR credit, it's all of the above. Consumers use different payment methods based on the situation in which they find themselves. Cash is still the preferred way to pay for small ticket items under $10, exceeding even debit and credit, per the Fed's Diary of Consumer Payment Choice. NCR's own research with Javelin has found that consumers value different aspects of different payment methods. Cash is valued for ubiquity, ease of use, ability to help budget, and availability to all. It's used by virtually everyone. Mobile payments are still quite niche by comparison, at least in the US. Even with mobile, what we see if more of a form factor change than true paradigm shift.

In the developed payment markets we are seeing the usage of cash declining but the amount of money in circulation, (issued) increasing. Cash is the preferred payment method for the criminal element, such as the drug trade. Mobile handsets are used to initiate payments and the mobile network delivers the payment instructions. With the number of real-time payment systems deployed mobile banking and Internet banking are dominating. These two payment methods also supporting card payments.

Debit cards, using NFC with the form factor being either the mobile handset or plastic/chip are dominating in developed payment markets. The mobile handset has without doubt far more capability. Before mobile and when chip cards were introduced I wrote that the issue with cards was they do not have a keyboard, a screen nor connect directly with a network. Guess what mobile has/does. Mobile is the payment channel of the future if not the present, until what comes next. Not the payment rails and back office has changed a great deal.

Mobile with a NRT payment platform will break down these barriers because of the speed of payment, security etc. Having a phone can equally be a status symbol. EFTPOS systems have support tips in many countries for sometime. The privacy and trust in the authorities is a critical issue in many countries. Is this where crypto comes into consideration.

One of the biggest surprises for many in payments is the largest economy in Europe - Germany. At over 4 trillion Euros, it is the third largest economy in the world following the US and China. Yet, over 60% of payments are executed in cash according to the Bundesbank (German Central Bank)? This is rooted in a deep historical context. Following WWI came a period of hyperinflation. Add the destruction of the German economy after WWII and the concerns over financial and political crises ever since have led to a mistrust of financial technology and holding physical cash as a psychological and cultural mechanism of control. Bottom line, history and geopolitics matter a great deal in any independent country's payments culture.

In navigating the challenges and taking the opportunities of mobile payments, the right approach will be to consider technological, cultural, regulatory, and economic factors as essential. Successful integration requires collaboration between stakeholders, companies, governments, and financial institutions to create an ecosystem that helps trust and addresses the diverse needs of different contexts and cultures.

Os pagamentos móveis trazem desafios e oportunidades para consumidores, empresas e sociedades. Desafios incluem compatibilidade, seguran?a e regula??o, além de confian?a e ado??o pelos usuários. Por outro lado, oferecem oportunidades de inova??o com novos produtos e servi?os, inclus?o financeira para popula??es desbancarizadas, e impacto positivo em eficiência, transparência e sustentabilidade. Adaptar-se a essas mudan?as é crucial para maximizar os benefícios.

It is critical to view payments holistically and any National Payment System covers multiple payment instruments, methods and platforms. Mobile payments is not a single service. Mobile money which links a handset to an account normally provided by a mobile operator is different to mobile banking which embraces mobile payments. Mobile money services are often closed loop systems. This means they are not integrated into the NPS. Mobile banking are normally open loop where fund transfers/payments can be between actors who have accounts with different institutions. This is critical for the development of any economy. Especially if supported by an NRT/Instant payment platform.