Additionally, there are entities with an active interest in cashless technologies. Only a handful of major financial companies have spearheaded the developments previously discussed, creating the means and infrastructure for cashless transactions — EMV chips, for example, originally stood for Europay, MasterCard and Visa. And this isn’t restricted to bankcards, with the likes of Apple Pay being developed in collaboration with American Express, MasterCard and Visa, among others. Another more recent driver of cashless transactions is

COVID-19, which has made people hyper-aware of physical interactions. Early in the pandemic, there was fear around cash transmitting the virus, as seen in the UK newspaper The Telegraph, which published an article entitled “Dirty banknotes may be spreading the coronavirus, WHO suggests”, which urged people to use contactless payments. This was quickly refuted by the World Health Organisation, with their spokeswoman Fadela Chaib explaining to Market Watch that WHO “did NOT [sic] say that cash was transmitting coronavirus,” and were “misrepresented”. But, Chaib did conceded that “you should wash your hands after handling money, especially if handling or eating food”— a standard precautioning during times of COVID-19, or otherwise. Despite this, the panicked shift to cashless had begun, and

unfortunately this came without the in-depth considerations needed when looking to go completely cashless.

Some risks of going completely cashless

The first concern about any new payment type is security — is people’s money safe? And, generally speaking, yes. Cashless technologies are extremely secure. Problems only arise when cards are physically stolen. A number of contactless (and thus PIN-less) transactions can be made before a card is blocked. While only a set number of consecutive contactless payments can be made before a PIN is required, this still leaves people open to significant losses — especially now that limits have been increased in the wake of COVID-19. Additionally, there is a concern over data security, which is an increasingly prominent issue, since merchants are able to gather, track and potentially misuse the vast amounts of information attached to cashless, and specifically contactless, payment solutions. Another serious concern about a completely cashless

world is the impact it will have on the most vulnerable members of society. Cashless payments almost always require a bank account, and for some, such as those without a fixed address, this isn’t really possible. These people rely on cash transactions for basic needs such as food, water, and public transport, so what happens when there is no cash? Moreover, second-hand, P2P markets could be severely affected, which many low-income households rely on for necessary products such as white goods. Furthermore, those on lower incomes also frequently use cash in order to more easily monitor spending and income. With the rise of cashless and contactless payments, money becomes more abstract and harder to manage for those who need to most.

From a merchant perspective, there are also many

potential downsides, since the infrastructure required to accept cashless payments costs them money — often for set-up, monthly rentals, and transaction-based percentages. These added expenses could severely impact small businesses, as well as it often being highly confusing to figure out exactly which fees a business will be subject to. These are by no means the only potential downsides, and for those interested in diving deeper into cashless transactions and the issues they might bring, JCM’s white paper, The Impact of Going Cashless, is available.

How the future of payments should and could look

That said, cashless transactions are here to stay and represent an important part of the overall payment landscape. However, they cannot be the exclusive mode of payment, and instead a middle ground must be developed which protects those most impacted by going cashless while maintaining the frictionless, socially-distanced commerce necessary in today’s world. In order to achieve this, it’s key to understand that frictionless commerce doesn’t mean cashless commerce, with automated cash solutions making payment just as seamless as cards or mobiles. This adaptation is already being seen in customer-facing kiosks as well as in back-end offices that deal with large quantities of cash. Gaming operations, for example, are increasingly using smart note recyclers and cashboxes, which take the risk of withdrawing, counting and depositing cash out of the hands of staff. Hopefully, with the dawning of the new year we will see

a return to un-distanced interaction, and people will be able to take proper stock of what an exclusively cashless society would really mean. In the meantime, stay safe and healthy over the holiday period and let’s look forward to what 2021 will bring.

DECEMBER 2020 27

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