There’s something we all do in restaurants that should seriously worry your business.
You know the little squiggle-in-the-air thing you do to get the bill? In less than ten years, I predict that you’ll be doing that to pay too. What you owe will automatically be whisked from your personal, business or shared account – whichever gives you the best rate of exchange or the biggest rewards – all with a flick of your wrist. If you decide later to move the payment between accounts, or alter the tip, or pay in a different currency, crypto or otherwise, you’ll do it just as effortlessly.
We’re witnessing a revolution in the transactional landscape and the drama isn’t centered on the removal of physical effort from the process. Inevitably, via AI, we’ll see the removal of decision-making too, from actions that currently require involved consideration. (“Should I put this on the Monzo?” or “Does my shiny new insert-name-of-trendy-card impress anyone at this table?”)
What does that mean for banks, Fintech’s and payment platforms? Only that much of the loyalty they’ve established with their consumers – all that empathetic brand-building – may be swept away. In the time it takes for you to wave at a waiter.
What can your company do to insure itself? For starters, read on.
When in Rome
To some extent, the way we like to pay is a cultural thing and digital payments have shown different rates of uptake worldwide. The Germans and the Japanese are among the most skeptical, seemingly suspicious of moving through the world cashless or leaving a digital trail of all their spending habits.
We Brits, on the other hand, are happier to tap for anything – a bottle of water here, a newspaper there – without much consideration, perhaps because we’re already so widely under surveillance in comparison to much of the West. The adoption of contactless by Transport for London in 2014 helped speed the broader take-up of tap payments, along with a wider range of affordable EPOS providers making tap-and-go feasible, even for the smallest vendors. A third of the UK population and a half of millennials now say they barely ever use cash.
Meanwhile, in China, there’s been a huge rise in the use of social apps to pay for goods or services with the likes of AliPay and WeChatPay – built by tech and ecommerce behemoths Alibaba and Tencent. Paying is seen as a frictionless extension of social conversation and QR codes are huge – a third of all mobile payments are made with them – to such an extent that they’re even accepted by beggars and buskers.
In South Korea, only about 20 percent of transactions are currently made in cash. But winning the race to cashlessness are the Swedes with only 13 percent of payments currently made in cash. The Royal Institute of Technology in Stockholm predicts that the country could abandon physical money within the next 5 years.
National rail operator SJ is offering commuters the chance to pay with a chip embedded in their hand – not unlike the chips our pets are routinely tagged with – and SJ isn’t the only Swedish company embracing biometrics. Stockholm-based ‘digital house of innovation’ Epicenter gained a lot of press, not all of it positive, for running an active campaign to chip their employees. The implants give staff access to the offices and photocopiers and allow them to pay for refreshments with a wave of the hand.
Whether you’re a well-established legacy bank or fintech disruptor these burgeoning trends need to factor in to long-term plans.
The case for cashlessness
This chip-based revolution has been lingering on the horizon for some time. “There’s definitely a really interesting bright future (in chip implants) but there’s been a lot of hype around it…this is a generational, behavioural thing that takes time”, says Buzzfeed writer Charlie Warzel – one of the many reporters who volunteered to be chipped while reporting the Epicenter story. But the realities of it need to be approached with caution, and of course, the idea of a cashless society fires up a lot of ethical debate too. Businesses in the FS sector need to ensure that they are well-read and prepared to address these questions as we move into the future.
Go Cashless, a not-for-profit whose sole purpose is ‘to promote the end of cash in the UK by December 31st 2020’, points out that cash is the currency of the black economy, that it enables tax avoiders, that it’s dirty (ask any bank teller for grisly confirmation) and is expensive to handle – and that we all suffer the knock-on costs, as a result.
But there’s a strong case against us ever going completely cashless. Big Brother fears aside, any significant power cut, and we’d all be looking at a sudden return to feudal bartering. Make of that what you will. Personally, I think my kids would miss the annual thrill of a crisp tenner falling out of the birthday card from Grandma and I’ve got a soft spot for the International Bank Note Society’s Banknote of the Year Awards (in my opinion, this year’s runner-up, Djibouti’s 40 Franc note, was robbed).
Studies have also shown that we spend differently dependent on whether we’re using cash or digital tender. For his book The Choice Factory, Richard Shotton investigated how contactless cards affect price sensitivity by asking people leaving coffee shops: ‘How much did you spend?’; ‘How did you pay?’; and then ‘Can I see your receipt?’. Cash payers typically overestimated spend by 9 percent, those who paid with a contactless card underestimated by 5 percent. Being aware of these sorts of habits will help businesses.
Intention less spending
To combat this, there are now products to counter ‘intention less spending’ and playing into the trend for open banking. Leading the way are the design team behind the Fitbit, San Francisco technology studio NewDealDesign. They have launched Scrip – an attractive, tactile device you load with spending cash.
To pay, you move your thumb across it in the way you would count out notes. Denominations physically ripple to the surface, mimicking the motion of giving cash. It’s designed to slow transactions, to re-invoke the human experience back to digital payment and to ‘turn off your financial autopilot’.
Similarly, Acorns, a micro-investing service, has launched a rewards debit card that’s vertically-aligned to suit the tap-and-go style of modern spending, but made out of tungsten, so it makes a satisfying ‘thunk,’ when you drop it on the table. Robert Brunner, of Ammunition, the agency behind the design, explains, “The heaviness is not an accident – the card was designed to be weighty to remind Acorns users about the money they’re spending.”
Food for thought for banking institutions that have been offering the same physical products for decades.
‘Mission control for your money’
While Acorn and Scrip are very interesting from a disruptive design point of view and have a valid point to make and particularly for a certain type of spender, my money is on the likes of Curve to dominate the future.
Curve offers to ‘simplify your financial life by connecting your accounts to one smart card and one even smarter app’. Taking a lead from the Citymapper-style trend for aggregating data to make people’s lives easier, it’s an important milestone in the evolution of consumer finance.
All Curve needs is the application of biometrics and you have my restaurant-of-the-future scenario. Whereby with a smile, a word, a wave or a thumbprint, the platform used will understand my financial habits well enough to settle-up automatically, using the account that best suits my needs for that exact transaction. But there’ll be no brand loyalty taken into consideration during the process.
Taking the face of financial brands out of the payment process poses a huge threat – and not just to banks. What if that platform can also switch me between telecoms or energy suppliers, to chase the best deals and rates from month to month? What does that do to the brand value of a whole host of utility business? The knock-on effect for all kinds of names is massive – and this scenario is just around the corner. Brands need to be aware and prepared.