Will cards end before money?

Although many people imagine a future without physical money, those who are at even greater risk of extinction, in fact, are credit and debit cards. Payroll research conducted by the UK's RBR (Retail Banking Research), which specializes in banking automation, shows that evolving technologies are competing with the use of paper money. However, they are able to replace even more efficiently the plastic issued by the seats.

Managing Director Dominic Hirsch and senior analyst Alex Maple in an interview with Valor said that in fact, the use of paper money continues to grow, especially in developing countries. "In the short and medium term, clearly, money will not disappear and we are a long way from it actually happening," says Hirsch.

For the RBR researcher, "many people ask us what will disappear first, money or credit and debit cards, and we see that the cards will definitely disappear before the money." And the reason for this is that solutions like virtual contactless payment cards and other forms of value transfer through mobile phones make the user experience "frictionless", that is, add convenience and convenience.

On the other hand, according to the director of the RBR, in Brazil there are almost 60 million people out of debt. "In countries with such a scenario, money will probably not be used anytime soon, or it will decline and eventually disappear into a horizon that we can not yet see."

In the researcher's view, people outside the banking system are reluctant to trust institutions. "If you think about the process of card payments, what happens is that you put your money into an account and trust that money is secure, but paper money is much more basic, instinctive and tangible," Hirsch adds.

Maple adds that even in developed countries, where the use of paper money has a downward trend, this reduction is occurring slowly and it will take many years for physical money to effectively disappear. "What makes money so reliable is that, for example, if there is a natural disaster or a nuclear war, money will still be accepted as a means of payment. Money is a reliable means of payment."

According to researchers, however, more and more new technologies extend their threat to both paper money and physical cards. "Today's technologies by far the biggest threat to money are mobile solutions, for example, Apple Pay and Google Pay, because they are a direct substitute," says Maple.

Apple Pay replaces credit and debit cards with the use of Near Field Communication (NFC) wireless technology. The owner of the cell phone needs to register their cards beforehand, a process done using the built-in camera. Once this is done, the user can perform a transaction just by approaching the smartphone from the billing machine and authenticating the payment from the biometric sensor of the iPhone.

Google Pay also works via NFC. The tool operates on Android-based devices, but unlike Apple's solution, it currently supports only the registration of credit cards.

Maple reminds us that bills nowadays are more commonly used in small shops and services, such as convenience stores, transportation and newspaper stands. "In the future, it is very simple and likely that the money in these places will be replaced by a 'contactless' card or a mobile payment method."

Hirsch cites the example of China. "There you have Ali Pay and WeChat Pay, which are payment solutions connected to social networks, without using card structures, but still linked to banks, because the credit structure goes through these organizations, because you have to put them in and take them out the money there, "he explains.

AliPay accounts for 700 million users and accounts for more than half of China's mobile payments market, which spins $ 5.5 trillion per year. WeChat Pay is the digital wallet solution for the most commonly used communication application in China. The company reports that it has more than 1 billion users.

Putting together the facilities for payment and transfer of money to the resources of the application has proven a model of strong appeal. At least in the Asian country. For the RBR researcher, the solution shows a lot of flexibility, since it allows to move values ​​almost instantaneously among users.

"There are different systems in other regions around the world, but so far no country has adopted such a person-to-person payment like China," Hirsch says. "The question is whether what happened in China will occur in other countries, or if there is something different in the Chinese market," he adds.

In the UK experience, what has changed the rule of the game, according to Maple, has been the advent of contactless digital cards. The contactless form of payment became popular very quickly, "simply by the absence of friction," he says. According to the researcher, "if the means of payment are universal, reliable and without friction they will grow and, combined with these aspects, can pose a threat to money and plastic, as already occurs in China."

RBR research shows that not all countries are equal in relation to technology adoption. "But what we observe is that when a mechanism is very popular in one country, it makes it more difficult to gain popularity for other mechanisms," says Hirsch. The director of the institute cites again the example of China and considers, due to the popularity of Ali Pay and WeChat Pay, there is difficulty of other means of payment to become successful in the country of Asia.

At some point in the future, physical money can still be replaced by more prosaic solutions, such as a QR code. "In this case, the blockchain would play an important role in enabling this type of solution, due to the characteristics of being [a record] unique," says Maple.

According to Hirsch, the blockchain has the potential to transform the way in which many processes work in industry, "but until now there is no real alternative [of solution] to the use of money and we do not even consider [crypto-coins as] bitcoin, which is more a form of investment than payment. " For the director of RBR, "blockchain technology may have a future role in payment systems to replace money, however we are a long way from that."

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