2015 was the first time in the United Kingdom that contactless transactions accounted for one in ten card payments according to the UK Cards Association. Stockholm, Sweden which was the first European country to introduce bank notes in 1661 is looking like the frontrunner in getting rid of them in 2016.
Non-cash payments’ share of total value of consumer payments in the Netherlands is 85% and in Africa they seem to have leapfrogged the traditional banking system with mobile payments like M-Pesa, so what role will digital currencies play in the future of the global cashless society we are entering into?
When the retail banking system first introduced computers to their business model in the late 1950s few bankers and consultants foresaw how their recently adopted computers and telecommunications equipment would revolutionise the way consumers exchanged money.
By the early 1960s a John Diebold and his consulting company Diebold Group had developed several networked computer systems for commercial banks in response to costly and cumbersome paper checks which were growing at an astounding rate during this period.
Diebold wrote in business journals at the time of an impending "transaction overload," cautioning that "the 'cashless society' is no longer an option but a necessity."
It was this that led to the warning to banks from George Mitchell, a member of the Board of Governors of the Federal Reserve in 1966 of the increasing costs of processing paper checks and urging the banking industry to consider how "the computer can drastically change money and its use."
Then in the late 1960s and 70s more bankers embraced the vision and brought about a nationwide electronic transfer system or EFT which they believed at the time that once banks digitized their accounts and merchants were connected to them by telecommunications it would be the precursor to a cashless and checkless society.
It wasn’t long until they discovered that implementing the technological areas of this new system was the easy part but selling the idea of electronic payments to consumers, merchants and regulators was far more difficult.
There was strong disagreement between the banks on how this new EFT system should work with very different views on how this new electronic system should be operated, structured and owned.
Although all of them wanted to eradicate the expensive check and cash system in place at the time it wasn’t until the late 1970s that much of the technology necessary for a national EFT system existed, but a lack of consumer interest and disagreements between banks had stifled its development.
Not until the 1990s and the mainstream adoption of debit cards being issued by banks and adopted by consumers and merchants did the idea of a cashless society envisioned in the 1950s look like it was a possibility again.
Fast forward to 2016 and we have the first peer-to-peer digitised currency based on cryptographic principles backed by a decentralized public ledger which maintains all transactions catch the attention of the mainstream with over 100 banks, credit card providers, smart contract services and stock markets looking at how to make use of it.
Bitcoin and its Blockchain eliminate fraud, charge-backs, expensive fees, and the need for middlemen and allows everyone to send anything of value globally, instant, practically free in a 100% verifiable way and it all regulates itself.
Looking at the past can give us a picture of how we got to the present and where we are heading in the future, and from looking at the history of the vision of a cashless society from the introduction of computers to the financial industry to the present day, I don’t believe it will take us much longer until the 50 year digitized dream will become a reality.
Only it will be global, borderless, decentralized and free from manipulation with Bitcoin as the forerunner as long as infighting in the community doesn’t stifle innovation for nearly 20 years like happened between the banks in the case of the EFT system.