The main goal of the FinTech industry is to make payments and services more convenient, effective, and cost-friendly. None of these factors are hinting towards a future in which cash payments will still be relevant although it will take a while until they disappear completely. De La Rue, who is responsible for printing the UK banknotes, says cash will be the king regarding payment methods for the future. Quite an interesting statement to say the least.
Cash Will be King, According To De La Rue
To every story, there are always two sides. Looking at things from De La Rue’s point of view, there is no reason to worry about the future of printed money, nor the impact FinTech will have on the UK economy. De La Rue is responsible for printing the £5, £10, £20 and £50 in the UK, representing a total value of £64 billion at the time of publication.
One thing hardly anyone can deny is how people still carry cash in their wallet, even when they prefer to pay with plastic cards. Unlike its plastic card counterpart, cash is free to use without additional fees and reliable. In the event of a power cut, or the card payment processing system being unavailable, cash transactions will keep on working without issues.
Oddly enough, the banknote market in Western Europe is growing by roughly 2.5% per year. There is a simple explanation for this as well, which is not all that positive. Central banks are in charge of ordering more money to be printed, which means there will be more banknotes in circulation. At a growth of 2.5% per year, that means all previous banknotes in circulation are faced with a value decline to make up for the additional currency. Five Pounds Sterling does not become worth more if there are two bills representing that same value.
It has to be said, however, that De La Rue will be in business for quite some time to come. The company is tasked with designing and printing of banknotes in 140 countries around the world. This is a clear example of how the financial ecosystem is very centralized, and why a few companies wield all of the power that affects citizens all over the world. But there is more to De La Rue than banknotes, as they also design and produces passports and security & tax stamps for products.
De La Rue Chief Executive Martin Sutherland stated:
“We are generally seen as the leading designer of banknotes and passports but we have to be innovative about the security features we introduce because we are in an arms race with counterfeiters. The longer a particular feature is in circulation, the more time they have to work out how it is done and how to reproduce it, so we have to be constantly introducing new ideas. We’re a counter-counterfeiting business.”
To people with some knowledge of the financial sector, it sounds like a crazy idea to put one company in charge of banknotes, valuable documents, and security stamps. Oddly enough, none of their products are as secure as the company would want people to believe. Counterfeit cash has been a plague for decades, and fake passports are a booming business as well. People will start looking for alternative forms of finance sooner or later, and stop using cash altogether.
How FinTech Offers A Better Alternative
When people think of the FinTech industry, cash transactions do not seem to have a place in the world. However, the FinTech sector is about more than just creating new payment methods, as companies can aid in making existing financial solutions more secure as well. Regarding banknotes and passports, holograms and certain types of stamps are a good start, but things could be improved in the future.
That being said, various countries around the world are already transitioning to a cashless society. There are other factors to take into account when it comes to dealing with cash transactions, though. Companies have to transfer funds from their tills to a bank account, which means they might need to hire a security firm to pick up and drop off the cash. As a result, there are more overhead costs involved, making cash a less preferable option.
Furthermore, cash is still paper money, making it vulnerable to elements out of our control. Paper tears easily, it can catch fire, become soaking wet, or simply get lost due to a variety of reasons. None of these factors promote the use of cash for extended periods of time, as consumers don’t want to risk losing their money. After all, there are no replacements for cash bills, unless the bill is slightly torn and brought to a bank, who will usually replace it.
Stating that cash will be king for the foreseeable future is quite a bold statement, although it holds a certain merit. Older generations of consumers will stick to cash for the time being, even though services like bank accounts are all digital already. Paper is slowly on the way out, and not just in the financial sector. However, it will take some time until we can speak of a proper cashless society.
Other than security measures, FinTech will offer a more digital version of cash, which is something plenty of consumers are looking for already. Mobile payments, for example, will be a huge trend over the next few years. E-commerce is all about digital payments as well, as cash is simply not an option. FinTech companies are thinking outside of the box; something De La Rue seems to be struggling with.
What are your thoughts on the future of cash and FinTech solutions? What is your preferred method of payment this very day? Let us know in the comments below!
Source: Telegraph UK
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