Visit KFC in Hangzhou, China, and you will see people smiling over dinner. Smile to Pay is a camera at the checkout that scans a customer's face, verifies their personal information, and takes payment. Smartphones allow you to use fingerprints, retina scans, or voice recognition (or even just your presence at a store) to pay for your purchase.
Sending a message from a mobile phone is enough to buy a bus ticket or make a money transfer. Thanks to mobile payments, it is likely that in the near future a large country like China will stop using cash altogether. This may happen within five years, or maybe even earlier.
Mobile payments
The pace of development and frequency of change in this sector is so high that it is pointless to try to make any long-term predictions. But one thing is certain: millions of people use their smartphones not only to pay for purchases, but also to control their finances. They use smartphones to apply for a loan, look for the best insurance option, or make donations to charity. The number of non-cash payments in China increased by 63 percent from 2014 to 2015. In the UK, the use of cashless payments has also become much more popular than the use of banknotes and coins. So cash is facing problems in all parts of the world.
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History of money
Meanwhile, the high-tech industry is re-inventing the building blocks of the economy. After all, since the sixteenth century BC, commodities have been exchanged everywhere for one form or another of currency. Later, in the seventh century BC, the first coins were produced in Lydia (today's territory of Turkey) from electrum, a natural alloy of gold and silver that can be found in the riverbed. Much later, paper money appeared in China. Then they got the nickname "flying money" because of their ease and convenience, and their introduction was supported by the central government. And along with this a very important concept emerged - the concept of trust.
Cryptocurrencies and questions
People needed to trust the authorities, in particular, that the sheet of paper they were holding was really worth something. Therefore, for many years, money was issued by governments through central banks. Now, cryptocurrency is created and stored electronically in a completely decentralized system. There are more than a thousand cryptocurrencies today, and the most famous among them is Bitcoin. However, all of this raises questions in the area of security and influence. Who controls the currency: government or computer networks? Who controls people's payments: tech companies, card providers, or banks? And the most important question is: who controls the data on all your transactions - you or them?
Cleo
On the top floor of a brick building in East London, an artificial intelligence startup with twelve employees and lofty ambitions is based. Cleo AI controls a digital assistant that consolidates the user's bank accounts and allows them to better control their money. Users ask questions about their costs through the social network, and Cleo answers them. “I created Cleo to solve my own problem,” said founder and CEO Barney Hussey-Yeoh. “I couldn't figure out how every month I get into overdrafts on my credit cards, so I set up Cleo to go into my bank accounts and tell me when I’m starting to run out of money. It changed my spending. It changed the way I look at money. And it changed the wayhow I behave with money. In short, I just had a lot more money left at the end of the month than before. The assistant entered the UK market and is currently approaching the 100,000 user mark, but Barney wants to reach a billion users worldwide to challenge the banks.
The future of such services
Barney says the digital assistant could very well replace banking apps, find the best deals by analyzing transactions over the past year, and the business gets a cut for each transition. “If you have a credit card and are overpaying on it, we can help you change your service provider. If you constantly find yourself in an overdraft and overpay, we will help you change your service provider. In the future, we will offer products that are cheaper, better and faster than those offered by banks,”he said. "Cleo will never be a retail bank, but she will be able to fulfill many of the functions of such a bank." It is far from the only such firm, and all of this poses serious cash problems. Now they are the kings of payments, but gradually the crown is dissolving.
Domination of cash
However, much evidence indicates that the days of the reign of cash are far from over. In most Western economies, banknotes and coins have not undergone any changes and are still a popular form of payment. In the United States, the amount of cash in circulation increased sharply between 2011 and 2015. In Brazil, Russia, India and China, the number of ATMs with the function of dispensing cash has increased significantly, while in Western countries their number remains stable and definitely not falling. Plus, they've even evolved. The creators of ATMs follow the trends of high technologies, therefore ATMs are gradually turning from machines with limited functionality into a kind of "bank in a box". High-tech ATMs may even become a full-fledged new industry, but this will happen gradually.
Marina Ilyushenko