Default Image

Will payment technologies ever replace our plastic?

You can buy cosmetics with bitcoin, antiques with PayPal and split your bills with Venmo. If you’re in the US or UK, you can even attach payments to your emails. Innovative new technologies like digital wallets, peer-to-peer payments and cryptocurrencies are changing the way we pay, but will they ever take plastic's place?

The future of plastic certainly looks shaky. MasterCard data from 2013 reports 85% of purchases worldwide were made with cash, showing the surprisingly low impact plastic payments have had since their appearance in the '50s.

In countries like Nigeria, Indonesia and India, where at least 98% of transactions are still cash-based, card payment infrastructures are lacking. It's easy to see how new, more flexible technologies could become the most popular way to send money. Communications have already seen a similar trend, with most developing countries bypassing landlines, instead going straight to more infrastructure-light mobile phones.

The ubiquity of the mobile is also helping new payment technologies overtake plastic. Over 2013 in Kenya, $24bn (an amount equivalent to over half the country's GDP) was transferred through mobiles. This system is still rooted in cash, and has been considered more secure than some of the country's banks. In developing countries, plastic's relatively unwieldy nature means it can't rival the economic empowerment flexible technologies provide.

The situation's a little different in developed countries. In Singapore and the Netherlands, at least 60% of purchases are made using cashless methods. Regulatory systems, designed to prevent money laundering, are a major barrier for new payment technologies trying to enter the marketplace in such countries. Consumer confidence is also an issue, as cybercrime is a common concern.

However, there is a relationship between payment tech and plastic. Popular banking alternatives like PayPal and Neteller still need to use the card providers' infrastructure. Using a customer's debit or credit card information, they transfer data to and from bank accounts. That said, some do show potential to replace banks’ services. PayPal, for example, allows users to hold money in its accounts, which could develop into an alternative current account.

Traditional debit and credit card companies aren’t blind to these developments, which is why Visa and MasterCard are inviting the innovators in. They’re combining their infrastructure and reputation with new technologies to access untapped areas, like the 84% of Spanish purchases that are still made with cash. Take Payoneer, for example. This global online money transfer service also provides customers with a MasterCard, so they can withdraw funds straight from an ATM. By making payments increasingly fluid, tech is effectively removing the barrier between on and offline transactions.

So, while plastic isn’t over yet, its fate could be divided in two. For developing countries there’s a very real chance that plastic could be completely overlooked in favour of mobile payment systems. For developed countries, this could be the beginning of borderless, remarkably flexible ways to pay entering the mainstream.

Comparison tool

Sending Currency
Buying Currency
Send USD Receive

J Abrahams

I sold some artwork in New York and needed to get my funds back to the UK. I saved over £12,000 over the quote given by my bank

V Piccciani

Everything went great. The money is in the account in Brazil exactly the amount we agreed, very fast and safe, thank you very much for the service
purchasing overseas property

OVERSEAS PROPERTY PURCHASES – SAVE ON YOUR PAYMENTS

Explaining how you can make considerable savings by getting better exchange rates and low fees associated when purchasing a property overseas. We show you how to make considerable savings, avoiding poor exchange rates, high fees and the best time to make the transfer.

Paying overseas suppliers in their own foreign currency

PAYING OVERSEAS SUPPLIERS FOR GOODS AND SERVICES

When paying overseas suppliers on a regular basis, currency conversion costs as well as fees when using your bank all add up. The Money Cloud saves you money by introducing you to specialist foreign exchange companies when conducting overseas business purchases and expenses.

Market Insights

Sign up for our newsletter.

Thank You for subscribing to our Newsletter

You have successfully signed up to our Newsletter