Cashless is king

Tired of lugging around a wad of notes in your purse or wallet? A heavy collection of jangling coins in your pocket? Well, times are a-changing. The accepted mantra Cash Is King is about to be turned on its heel. Welcome to a future free of cash. Ok that is probably still way off but things are definitely moving in that direction.

Although the volume of cash transactions in most countries is still very high, cash free purchases are forecast to grow between 7% and 8% every year to well over 50% non-cash penetration by the year 2030. This is coming off a low base though - the country with the lowest percentage currently is Finland with just under half of all business transacted in cash. In Australia it’s 61%, and in most third world countries there are hardly any internet based payments at all. That seems self-evident but with rapid advances in technology forcing the cashless trend, businesses will be forced to move with the times.

Apart from debit and credit cards, your smart phone is the obvious device to conduct business in this changing environment. I’m not sure about you but I love making payments and purchases from my mobile phone, so instantly gratifying and perfect for doing admin on the run instead of wasting precious hours in a dentist’s waiting room or hanging around for the kids to finish netball practice. Instantly identifiable, as your mobile number is unique to you, and most people are loathe to change numbers as it is recorded on every class list and database in their network.

The convenience of online transacting is soon to include even phones that are not deemed “smart” - software developments in the making will enable so-called android phones to conduct business on the internet. Yes, even consumers in third world countries want the ease of paying online with mobile devices.

As investors we should be aware of these major developments or investment themes to work out what types of companies will be the growth centres of the future. In a cashless society one would expect those businesses that facilitate the movement of virtual cash to be in the pound seats. Think Visa, Mastercard, eBay, Paypal. Plus those innovative start-ups we haven’t yet heard of. And of course banks, which are likely to take a clip on each transaction that passes through. Record profits anyone?

Disclaimer: the wisewomen blog does not constitute financial advice. We recommend individuals obtain financial advice specific to their situation before making any financial investment or insurance decision.