I think it was three years ago now, I was in Toronto giving a talk for the MoneyShow. A few speakers and I went to dinner afterwards.
The food was great, the waitresses had talent, and the place was jumping. But what struck me was that each server had a small card scanner on her hip.
It printed the bill, you gave her your card, and off you went in less than 30 seconds.
There was no tired ritual with the brown pleather receipt folder. There was no long line at the cash register or waiting a half-hour while she worked through six checks at the same time everyone wanted to leave.
Why don’t we have this in the United States? I wondered...
No Cash
It’s becoming rarer to see dollar bills or loose coins changing hands.
A whole new generation of consumers is emerging who don’t carry a physical wallet or purse. They barely have any cold, hard cash in their pockets, either.
Today, cash is only used for three in every 10 transactions, down from six in 10 a decade ago. Moreover, it is forecast to fall as low as one in 10 transactions within the next 15 years.
Think back to the last time you paid for something in a shop or a café.
Did you pull out a $20 bill and wait for the clerk to open the register and give you change?
If you did, you’re in the minority.
It’s far more likely you simply waved your card or smartphone, and presto...
The payment went through without a single note or coin changing hands.
Soon, the phrase “cash is king” will be one of those old-timey sayings your kids can’t understand, like “pay phone” or “floppy disk.”
Today, the majority of transactions are moving to Tap & Go — either by card or smartphone. Consider:
- 64% of food merchants offer Tap & Go at checkout.
- 81% of fast-food outlets offer it, too.
- So do 92% of drug stores and pharmacies.
I don’t know if you’ve gotten yours yet, but card issuers are delivering a flood of contactless cards to consumers that you don’t have to swipe or insert to use.
Visa, for example, will issue more than 100 million contactless cards in the U.S. by the end of this year.
In further proof we’ve reached a major tipping point...
Economists believe the U.S. will go cashless within the lifetime of millennials.
Forbes calls it: “A once-in-a-generation shift in the financial services industry.”
Simply put, this is the leading edge of the biggest technological shift you’ll see this decade...
But it’s more than Tap & Go; it’s about financial technology, or fintech.
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Fintech
Fintech is about digitizing money, and it’s about monetizing data. It’s about how we can create and capture the value‑add from data.
This new technology is spurring a second value surge that is starting to be seen from an increasingly digitized economy. It is changing how banks do business and money moves around.
Fintech is creative destruction at its finest.
New fintech solutions will help small businesses because they will be better, faster, and cheaper. Payments clear in half an hour instead of three to five business days.
Cash flow increases. In one example, Alibaba monitors and evaluates online transactions to identify commercial opportunities and then offers loans to small businesses through Alipay.
In addition to financing and access to capital, fintech can help all businesses through improved payments systems, customer relationship management, and invoicing and collections. Fintech solutions include e‑invoice management portals and supply chain finance solutions.
There are now robo-advisers to help you sort out your long-term financial goals. Fintech is also moving into the back-office world to help with accounting, payroll, and taxes.
Insurance companies will be huge beneficiaries, as the new data mining will help manage risk.
And of course, it can all be done through a mobile phone. According to Statista, “The global mobile-payment market is on track to surpass $1 trillion in 2019.”
Goldman Sachs estimates that the worldwide fintech industry will be worth $4.7 trillion.
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