Snippings

I was very happy to note that Starbucks has decided to go the extra step and get rid of cash. Well, in one of its stores at least. The coffee chain is conducting an experiment at a branch in Seattle, Washington, by having it go completely cash free to explore the the dynamic. It hasn’t yet spread – the last Starbucks I was in I wanted to pay using my app but I’ve forgotten the password so I just used a contactless card (like pretty much everyone else in the line), but I’m sure I saw someone pay with cash while I was waiting – but I’m sure it will as the meme is speaking. Credo tested a cash-free policy at its San Francisco and Brooklyn stores and “it went off without a hitch” so the chain opened its first cash-free establishment in Boston and never looked back.

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Cafés are following suit in other developed nations. A new one in Singapore had the proud title of the first cashless restaurant on the Island. Interestingly, as well as taking the usual payment cards (including NETS, the local debit network), they used the opportunity to accept cryptocurrencies “such as Bitcoin” (although I’d be surprised if anyone paid this way.). Why the trend? Well, as the Washington restaurateur Bo Blair (whose company operates eight fast-casual and three sit-down restaurants in DC, some of which had been robbed) notes, while cost-conscious small businesses might operate cash-only to avoid card processing fees, cash has hidden costs such as armoured cars taking money to banks, an extra hour for workers to cash up (and dishonest employees helping themselves).

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Now, coffee shops and cafes go cashless for all of these reasons – the cash register wastes counter real-estate, making change is time-consuming and holds up the line, cashing up is an unproductive use of resources – they have an extra driver. Here’s what an Australian butcher had to say about it: “We’ve been cashless for 3 years now and haven’t looked back… We made the switch for a number of reasons, but chief among them was something that’s of the utmost importance when selling food: hygiene”. I can remember this being a factor many, many years ago in the early trials of Mondex. For bakers (and hairdressers, as I remember) handling dirty money meant that they had to keep moving away from customers to go and wash their hands.

Anyway, hand washing or not, contactless has exploded in the UK. In the last year, contactless payments volumes were up by around a third and contactless is now more popular than chip and PIN at POS. In fact, contactless is now more popular than cash (cash usage fell 15% last year).

Contactless makes all of the hidden costs of cash a thing of the past. Frankly, it’s not that hard for food outlets in certain places (eg, London) to decide to go down this route. In the UK, over a third of people surveyed regularly leave home and go out with just one or more cards, while a sixth already leave home with just a single contactless payment method (which in some cases will be phone or a wearable I think). This why I told the BBC, in a story about cashless pubs, that “It’s slightly surprising to me that there aren’t more of these cashless places already”.

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“The European Central bank has no plan to issue a digital currency because the underlying technology is still fragile and the use of physical cash still high in the euro zone, the ECB president said on Friday.”

From “ECB has no plan to issue digital currency – Draghi | Reuters”.

According to Reuters, the President of the European Central Bank (ECB) Mario Draghi has reiterated that there are 

Meanwhile, in Nigeria

“Every few days, Tasiu Abdurrahman takes the money he makes from selling spices and buries it in his yard. The 55-year-old closed his bank account eight years ago after growing disillusioned with standing in long lines for hours to deposit or withdraw cash.”

From “Nigerians bury cash in backyards as mobile banking stumbles”.

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“Less than 6% of Nigerians use their handsets to transact using mobile money, compared with 73% of Kenyans, where more than two-thirds of adults have a bank account”

From “Nigerians bury cash in backyards as mobile banking stumbles”.

 

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“Cellular phone operators would invest more if they were allowed to lead the way, said Emeka Oparah, a spokesman for Bharti Airtel Ltd.’s Nigerian unit, which has 40 million subscribers.”

From “Nigerians bury cash in backyards as mobile banking stumbles”.

 

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“Venture capitalists, such as Albert Wenger of Union Square Ventures, who was an early investor in Twitter, now talk of a ‘kill-zone’ around the giants. Once a young firm enters, it can be extremely difficult to survive.”

From “American tech giants are making life tough for startups – Into the danger zone”.

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The Bank of Canada published an interesting working paper on retail payment transaction times (“How Long Does It Take You to Pay? A Duration Study of Canadian Retail Transaction Payment Times“, Working Paper 2018-46, September 2018). The author finds that “cash is more efficient in terms of time than cards, allowing for the processing of more payments… it helps explain the continued use of cash to pay for low-value retail purchases, despite the increase in payment innovations. This is a useful contribution to the discussion about cashlessness and I was thinking about it when I went to the fish and chip shop recently. Now, I haven’t used cash in the fish and chip shop for years. Like most normal people, I pay by contactless, and it seems pretty quick to me, even allowing for the time taken for online authorisation. So while I was waiting for the haddock and chips, I watched the couple of people behind me in the queue. One used contactless but the other used a £10 note, which meant that the .

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A Jixi resident said the supermarket had different – but poorly labelled – lanes for customers who paid by cash or with their phones.

From A cashless supermarket, a bunch of grapes and the growing digital divide in China’s economy | South China Morning Post.

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The growing “cashlessness” of Chinese cities threatens to expose underlying issues of economic instability. Mobile payments are carving out lines between young and old, and between the prosperous urban middle class and those left behind by the boom times.

From China Can’t Afford a Cashless Society – Foreign Policy.

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The court however curtailed the scope of the Aadhaar identification scheme, declaring that it would no longer be required to open bank accounts, obtain mobile telephone connections, admission to schools.

From World’s largest biometric ID system approved by Indian court as 1 billion enroll for welfare and tax.

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As of 1 January 2018, all companies with a Chinese business licence – a necessity for operating in the country – were brought into the social credit system through the new licence requirement to have an 18-digit “unified social credit code”. Through this business ID number, the Chinese government keeps track of all businesses, reporting transgressions on its National Enterprise Credit Information Publicity System, Hoffman said. The system extends to non-profits, NGOs, trade unions and social organisations after 30 June.

From China’s social credit system ‘could interfere in other nations’ sovereignty’ | World news | The Guardian.

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This has led to introduction of a legal requirement for banks and building societies to support app-to-app data flows, which will enable customers to approve TPPs via their bank or building society app.

From Open Banking shouldn’t be written off, the revolution is just starting – FinTech Futures.

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