Mastercard pushes for rise in cashless payments despite Visa's IT fiasco
Mastercard is pushing for a bigger uptake of cashless payments, but the company reassured consumers it has "massive contingency plans" for IT failures like those that blocked millions of transactions at rival Visa.
Anne Cairns, the group's vice chairman, told the Press Association that it made financial sense for Governments to ditch cash in favour of card or digital payments, given that cash can often have higher production, transport and insurance and security costs.
"Cash costs a lot of money, it costs a country between half a percent and 1.5% of its GDP (gross domestic product) and so governments are waking up to the fact that they could really benefit their economy by getting rid of cash."
There is also a cost to consumers, who might have to pay more when buying a rail ticket in person, rather than online in advance, for example.
"So cash is actually damaging, hurting the poorest people in the economy and it's not just here but it's everywhere in the world.
"How do you live your life, how can you fly around, how can you order an Uber, if you don't have a means of digital payment?"
A recent report by UK Finance showed that debit card payments overtook those made by cash for the first time last year, helped by the boom in contactless payments.
There were 13.2 billion debit card payments in 2017, eclipsing the 13.1 billion payments made in cash.
But when asked whether it was risky to push consumers into a digital-pay economy in light of a recent IT fiasco that blocked millions of Visa payments in early June, Ms Cairns said any system should have "multiple back-ups."
She also assured that Mastercard itself was well-prepared for similar issues, saying "we have massive contingency plans" in place.
Visa has since confirmed that its issue were caused by a "very rare partial failure" of a switch in one of its data centres, which meant its back-up centre could not automatically process all transactions.
Having now fixed the issue, the company said it was taking "all necessary steps" to prevent the failure happening again and pledged to compensate customers in the wake of the 10-hour debacle.
Visa currently accounts for the overwhelming majority of debit card transactions in the UK.
But recent deals with the likes of Santander, TSB and Virgin have meant that around one in five debit cards are now a Mastercard.
While the Mastercard vice chairman said she could not comment directly on the Visa case, she said customers also needed to take on some responsibility by diversifying their wallets with a "series of different cards".
"You as a consumer today probably have quite a lot of choice as to how you interact electronically, and today you still have cash.
"And we're not actually saying that cash needs to disappear completely, we're saying it needs to diminish in the economy because there's so many better ways to pay.
"So I think the way you should think about the future and system failures and so on, there will be multiple backups within any particular system but also you as a consumer will have multiple ways of interacting."