Are we Heading towards a Cash-less or Cash-more Society?

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By Dr Inci Toral & Professor Ronan de Kervenoael, 
Department of Marketing, University of Birmingham


The use of alternative payment service technologies is an old notion dating back to early 20th century. Western Union bank began issuing charge cards (bills to be paid in full in each statement) from its most loyal customers as a way to introduce further payment flexibility in 1914. Since then, the introduction of payment cards has enhanced loyalty schemes, fraud control and the ability to deal with multiple accounts in multiple currencies. An important step and indeed a catalyst in the growth and development of card payments in recent years came with the development of Radio Frequency Identification (RFID) and Near Field Communication (NFC) technology, which enabled devices such as mobile phones to serve as payment instruments.

While cashless payments simplify transactions, not all firms actively respond in the same way to these changes. It is established in research that market actors will protect their territorial power and resist to change their business models (Wade et al., 1998). One key issue, linking all players in the payment chain, however, is the fact that cashless payments are the most convenient for small value items, such as daily essentials. Most firms selling daily essentials are usually low tech and labour intensive, with low technological investment, often outsourced to comply with regulations (accounting) or promotion (website). Cashless payments are seen as cumbersome with high charges by banks (e.g. POS terminals) for a large amount of low transactions making cash predominate the market. Cashless payments are perceived as interesting but too often just adding another layer of choice (without reducing current options), hence, implying further costs and administrative duties. A second issue is linked to critical mass. Investment in cashless payments needs to offer users multiple added value to encourage engagement.

What is clear from these new services and visions is the way that different stakeholders, such as Apple Pay, Samsung Pay, and Google Pay, integrate the diversity of sectors and services involved. While resistance will exist and defend the status quo – not least because multiple payment platforms are associated with inefficiency and cost–, change in demand and environmental conditions (e.g. a pandemic that forces society into social and physical distancing) will force the market to change and transform the traditional payment chain. A central influence amongst stakeholders requires an eagerness to actively pursue a collective overarching strategic vision for the payment chain in which the resistance to chain is weakened.

Cashless payment systems must also find ways to translate corporate ideals into tangible day-to-day practice to directly influence and shape the marketplace. This is particularly important in the development of the critical mass of services. This process implies that some current practices (e.g. cash) may disappear to give rise to new ones, using mobile devices for all sorts of payments. Thus, the significant change under way towards a cashless society must be understood within the wider context of decision making struggle amongst stakeholders regarding appropriate technology engagement. Adoption and implementation of such models critically depend on the stakeholder interests and market changes through disruptions, such as Covid19 or new market entries (Apple Pay, Google Pay, etc.). As technological use widens, all stakeholders convert towards more accepted means for staying competitive in the market. Nevertheless, within this perspective cashless payments are still emerging. The full extent of the consequences of the cashless payments and whether this will ultimately be negative or positive for all stakeholders remains to be seen, as innovation of services is still often a matter of trial and error.


The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.


Sources: Wade, J. B., Swaminathan, A., & Saxon, M. S. (1998) ‘Normative and resource flow consequences of local regulations in the American brewing industry 1845–1918’. Administrative Science Quarterly, Vol. 43, pp. 905-935.


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