Killing off cash? Your phone as your wallet

Picture of moneyReports are circulating that we're heading for a cashless society and not just because we're all broke - smartphones look set to replace wallets by 2016 as Google and others launch virtual wallet products and the social media generation increasingly expects to be able to do everything on its phones.

Only...what about people who don't have or want a smartphone?
Let's not be overly anti. The technology is impressive. Even without contactless payment, the fact that someone can stand in a branch of Waterstones in the morning, check the price of a book on Amazon, order it and have it delivered by the evening, all from their phone, is impressive if annoying to traditional shop keepers.

Further explorations of Near Field Communication (NFC) technology being built into phones will mean increasingly that you can use a phone to communicate with another device without their having to touch each other. So someone with the right sort of cash register could in principle charge you for goods without the need to get anything out of your pocket - just put the chip that's on your debit or credit card into your phone instead and it should work. It could make life a lot easier.

Certainly I've found using an app to pay my parking charges by my local train station a lot easier than fiddling around looking to see if I have the right change. Today Starbucks announced that a similar scheme will operate for buying coffee in the UK - it goes live in January.

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On the other hand there's the issue of trust. You go into a shop, you stand near the till and it debits money from your phone - how big does a chain have to be before you trust it to do so? And how many smaller businesses will be frozen out? Let's not kid ourselves that the terminals they'll need are going to be cheap.

There's also the reluctant consumer to consider. Recent Ofcom research says that 95% of the over-65 population doesn't use a smartphone. A report today in the Daily Mail suggests we'll all be using phones rather than cash in five years time, so those over-65s will be over-70s. This isn't that old and it's a lot of people to consider. (Note: I am not suggesting reluctance to use or inability to afford a smartphone applies only to older people - but these are the figures I have to hand.)

There's a genuine concern about the creation of a new underclass - the un-digitised are already going to be suffering poorer service because they can't get onto the Internet; do we want to disadvantage them further? Remember it was only this year that the Government pressurised the banks to abandon scrapping the cheque book because of the practicalities of such a radical change. Scrapping or even de-focusing cash itself is if anything more radical - I'm predicting pockets will still be jangling with coins in five years, whatever the other press might say.

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