Farewell to cash? Expect it to be a very long goodbye: Don Pittis

Royal Bank may be going head to head with Apple Pay over mobile payments technology, but Don Pittis says don't hold your breath for the arrival of the cashless society.

Heartbeat monitor is latest entry in mobile payments stakes, but will you give up cash?

Royal Bank may be going head to head with Apple Pay over mobile payments technology, but Don Pittis says don't hold your breath for the arrival of the cashless society. (Eric Risberg/Associated Press)

An Apple Pay rival created by a Canadian company means that the technology for a secure cashless society is only a heartbeat away, but the question is whether you will be willing to give up all your dollar bills in exchange.

Bionym's new device, tuned to your individual heart rhythm, is being rolled out with the support of Royal Bank. It's a wristband called Nymi, and it sounds like a real contender to make you feel safe about using electronic money. 

The Nymi concept is fabulous. Royal Bank gets a lot of points for investing in an innovative cashless experiment. The system combines the two rising technologies of wearable computing and biometric authentication.

The Nymi device, made by the Toronto-based company Bionym, reads a user's heart rhythm for identification purposes. (Bionym/Canadian Press)

But rather than using voice prints, fingerprints or retina scans, Nymi uses the unique pattern of your heartbeat as measured by a small wristband. Royal Bank is getting 250 people to try it to make sure the system works in practice, with the eventual plan of offering it to all Canadians.

The competition will be tough. Big companies across the spectrum are trying to invent secure mobile payments systems with the eventual idea of getting rid of physical cash altogether.

Blackberry has BBM Money. Android has Google Wallet. And Apple has Apple Pay, which some say will do to cash what the iPad did to the music industry. 

Just tap that card

And that's just the latest wave of smartphone-based systems. Already many of us carry debit and credit cards with embedded chips that allow us to pay electronically just by tapping on a checkout reader.

Despite the hype, phone-based mobile payments systems have yet to take off. 

Currently they represent "a rounding error" in total retail sales, says Robert Hof, writing in the MIT Technology Review.

Various partnerships involving wireless providers, banks and others are emerging to allow mobile payments in Canada. (Canadian Press)

According to Bill Maurer, an expert in the anthropology of money, people are largely satisfied with old-fashioned money and plastic cards.

"All these mobile wallets are looking for a problem to solve," Maurer told Hoff.

And while Apple Pay suffered a blow when celebrity nude photos were purloined from its iCloud network, unfortunately for Royal Bank and Bionym, security is not the only reason cash will be with us for a long time yet.

For a lot of people, a set of ones and zeros in computers just doesn't feel like real money. That's why debt counsellors often insist people who spend too much cut up their plastic cards.

Put it in an envelope

Archaic as it may seem, one way people are taught to manage household finances is by putting cash in envelopes that are labelled rent, and food and recreation. 

The more numerate among us might scoff, saying electronic totals on your computer screen will do the same thing. But there is no question that a lot of people have trouble keeping track of their money, even when you can fold it. 

The informal market economy also demands cash. Kids with a lemonade stand don't have card readers.

Neither do farmers selling a few eggs and apples at the farm gate. Garage sales, church fairs, buskers and beggars are just a few examples of a world of small exchanges that work best with cash.

And then there's the desire to escape Big Brother. In a world where giant corporations know nearly everything about us, it is liberating to have one small area where nobody is watching. And cash transactions mean your spouse doesn't know you bought chocolates on the way home.

Cash is also free. One of the last place where banks generally don't charge you a user fee is when you take cash out of your own chequing account at your own bank. Everything else is a "service" that costs you or costs the retailer.

Cash is universal. The various alternatives to cash are accepted some places and not others. Until the various providers agree on a single system, or until one system wins out, cash will remain necessary as the exchange of last resort.

We're used to it

Of course, the single strongest reason people will refuse to give up cash is because we are used to it. 

We think we know how cash works. We've been using paper money for 500 years in European society, nearly 1,000 years in China.

But we shouldn't rule out the possibility of a virtually cashless society eventually. 

We've been through two similar transitions — when we shifted from barter to coins made of precious metals, and then from coins to paper money.

Barter still exists. So do coins made of precious metal. Few people actually use either in daily exchange. Eventually, paper (or in Canada's case, polymer) money will go the same way.

But when? Probably not for a while yet. Maybe the cashless society will arrive on the same day as the paperless office.


Don Pittis

Business columnist

Based in Toronto, Don Pittis is a business columnist and senior producer for CBC News. Previously, he was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London.


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