Will The Future Of Payments Include Cash?
Eric Christensen, Vice President of Product - Payments, Fraud and Financial Services at Digital River. getty  While credit and debit cards took away the need, in most cases, to carry cash years ago, the events from the past year have created a whole new rulebook for consumer preferences when it comes to shopping online and in person. As merchants and retailers of all sizes rushed to pivot operations for the new normal, contactless cards and digital wallets were accelerated into the forefront of the payments world. There are street vendors with contactless card readers, PayPal allowing bitcoin as a form of payment and Girl Scout troops accepting Venmo. (Full disclosure: As a payments provider, our company has business relationships with PayPal and Mastercard.) The rise of digital wallets has changed how people pay, and the increasing rate of globalization is continuing to push the adoption of these cashless payments. The Next Wave Of Technology  As recently as 2015, U.S. retailers and consumers were sluggish in the adoption of chip-based payment cards  even as this payment method was already part of everyday life in other parts of the world. Some merchants hesitated to adopt the feature because of the associated costs, especially small-business owners who had to invest an average of $2,000 for installation and other costs. Other retailers were slow to get on board because they werent convinced that chip cards were here to stay. Many worried about investing in infrastructure that would be abandoned for the next trend. However, the pandemic has accelerated adoption of contactless payments beyond what can be considered a short-term trend. As chief payments officer of a global e-commerce partner, I expect merchants who were initially uncertain about digital wallets will understand the shift is permanent, along with the growing willingness of consumers to try even more cutting-edge payment technology. The demand for more cashless options in other markets is already there in the form of contactless cards and the rise of person-to-person (P2P) transactions with apps like Venmo and Zelle. Mastercard conducted a global study on consumer behavior toward contactless payments, and 79% of those surveyed reported they were using some form of this payment method. P2P payments are attractive to merchants as well as consumers, because they can be easily layered into existing point-of-sale (POS) systems and are already popular with younger generations. Cashless payments could be a solution for environments where theres an influx of customers and limited physical resources, such as the Tokyo Summer Olympics. If it is not disrupted by Covid-19 concerns, this years event will be very different from previous Olympic games. Merchants are still planning to cater to the thousands of athletes, coaches, reporters and local spectators who will attend. These merchants could use contactless technologies to support faster transactions and speed up sales, decreasing the likelihood of crowds waiting in long lines. Some business models, such as concert venues and sporting arenas, are already adopting new forms of technology to speed up certain processes without forgoing security standards. One example is the company CLEAR, which uses biometric data instead of traditional ID documents to speed up lines at places such as sporting venues and airports. As more businesses implement these alternate forms of technology and make it more of a common experience, I expect that will further accelerate both consumer acceptance and product development of digital methods, such as biometric payment authentication, wearables and contactless readers, that support a cashless society. While there is no immediate rush for merchants to adopt these technologies now, retailers should continue to keep an eye on these trends and changes in shoppers preferences. The adoption of digital wallets is accelerating at different rates around the globe, but the Covid-19 pandemic has turned cautious shoppers away from traditional cash at a quicker pace. While the pandemic has caused contactless cards and P2P transactions to become more mainstream, some forms of digital payments such as cryptocurrency still present challenges for consumers and merchants because of the unique regulatory challenges and potential tax complications that come with it. Theres a variety of e-commerce partners merchants can consider aligning with to lift the burden of the technology selection and implementation process of the new payments they do want to adopt. These partners are already equipped with essential technologies and relationships and can easily integrate new payment methods and capabilities into existing systems. Public Opposition  In recent years, there has been pushback toward cashless stores, with some cities such as New York banning them altogether. Restricting payment to cashless options only can result in unintentional discrimination against shoppers without debit or credit cards, a population that has been historically disenfranchised. The amount of the U.S. population that is unbanked is staggering  according to a 2019 survey by the Federal Deposit Insurance Corp (FDIC), about 7.1 million U.S. households fit this description. In addition to consumer conservatism and pending legislation, security concerns are another barrier preventing universal adoption. Consumers are slow to trust technology they dont understand, and with data breaches making headlines, some consumers will remain hesitant due to a lack of trust over who has access to their financial information. In reality, the U.S. is a long way away from a cashless society, and theres no way to know when it might get there. In the near term, there will likely be more legislation protecting consumers and financial institutions that will affect adoption rates of cashless payments in certain markets, even as others embrace the change. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms.