Consumers for a while now have been using cash less and less to make purchases at the store. More and more people are paying their bills online and seldom writing checks anymore.
ATM transactions/Debit cards are ubiquitous in transactions along with credit cards. Not only is it more convenient and cleaner, than carrying paper currency and coins around, it also perceived as more secure.
The digital wallet is just around the corner. In other words paying with your mobile device, such as your smartphone. It is already here though not quite ready for prime time due to security concerns.
Whether or not the public is ready for it is another question. Also there will be a steep up front cost for retailers to have terminals that are synchronized with the mobile wallet.
But as those concerns are being addressed and people will learn to like this way of buying things by simply scanning the items they want to their smartphone.
The stores will like it too, as it will eventually make the cash register obsolete, saving them money, paper, floor space and maybe even employees. Pay by phone will be commonplace,the question is how soon?
However cash will still have a places, as some consumers like to know what they have on them to spend rather than face potential high overdraft charges and high interest on their credit cards.
Particularly, many older shoppers will still prefer to pay with paper money. Others who prefer the more untraceable nature of cash will continue to use it for under the table transactions and more nefarious means.
Coins will be around longer than paper money because collectors will like the tangible feel on coins,whereas paper money carries far less numismatic value. Kids will like having coins in their piggy bank and all its different denominations make it useful for teaching them counting skills and money management.
Bitcoin is a controversial new method of currency in the virtual online world. They have the advantage of being anonymous,which is precisely the problem. Because they are even more untraceable than paper money(which has a serial number) the concern is that Bitcoins are being used for illegal activity such as child pornography and drugs.
This use of digital currency has grown over the past several years, attracting users ranging from video gamers looking for ways to buy and sell virtual goods to those who don’t trust the traditional banking system.
Touted by some investors as the future of money, these virtual currencies have attracted the attention of U.S. regulators looking to bring them under anti-money laundering rules.
Just yesterday, the growing industry of digital cash took another hit. he U.S. Attorney’s office in New York indicted seven people for allegedly creating an Internet currency and laundering $6 billion of criminal funds.
The company was called Liberty Reserve. In their indictment, federal prosecutors said its criminal activity was “staggering” and called the Costa Rica-based company “a financial hub of the cyber crime world.”
The LR currency was 100% untraceable.
The untraceability is what concerns government regulators about digital currencies, including ones like Bitcoin, says Kieran Beer, who edits the website Moneylaundering.com for the Association of Certified Anti-Money Laundering Specialists.
“I don’t want to say that Bitcoin is the equivalent of this and that they’re one and the same, but this idea of anonymity that is so important to Bitcoin is going to be further challenged,” he says.
The bottom line: We are entering a new phase in money transactions which is changing the face of money, literally and exponentially.