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On the subject of a cash-free society, different views…

One MNB reader wrote:

I was recently at a seminar where a speaker from the banking industry was asked if cash would ever completely disappear.  He immediate response was a resounding “NO”.  When pressed for an explanation, this was his response:  “There will ALWAYS be a need for (and I love this term) anonymous transactions.  We exchange a good/service for cash then go on our way.  No paperwork, no paper trail nor any evidence of the transaction whatsoever.”
 
This may seem somewhat arcane and to some people a little suspicious BUT I suspect will continue into the distant future.


But, MNB reader Dan McQuade wrote:

As I frequently travel (teach) in  both India and China, I have seen the incredibly rapid growth of the cashless society in both those countries.

Your point of 7% of US population being unbanked or under-banked will not be a roadblock to this change. 

Check out India where Paytm Wallet and now Paytm Payments Bank will reach a "half a billion" of un-served or underserved consumers across the country. (Currently right now you can ask a friend, relative even a retailer to take your cash and put it into your Paytm wallet (which basically is your mobile phone number acct...so have a phone, you now have a bank account). What is interesting is that this rapid growth was brought on by disruption, when PM Modi announced the 2016 demonetization program.

Also Starbucks in China has seen remarkable growth with Tencent's WeChat payment platform. It is used everywhere not just Starbucks. I think China will become a cashless society faster than you realize!

Periods of disruption are periods of great opportunities. (You have to be able to recognize both)


And, from another reader:

To me, going cashless is less about efficiency and more about data. Starbucks has been ahead of the curve with its card and app loyalty program. They’re able to use that individual-customer-level data to deliver targeted incentives to get you to spend more. Like Amazon Prime customers, those customers who’ve registered with Starbucks Rewards (and pay by mobile app) probably drive far more revenue than non-Prime and non-Rewards customers. With cash, there’s no data and there’s no incentive for loyalty.
 
Now Starbucks just needs to find a way for 3rd party “Starbucks” to accept their app and incentives. Don’t make a customer think about who owns or operates a particular “Starbucks”.

KC's View: