Going Cashless at the Point of Sale: Hits and Misses in Developed Countries

This paper reviews failures and successes in the use of smartcards and mobile phones as payment platforms in developed countries. It examines six such devices to draw lessons about their potential in developing countries. Although debit cards are standard payment instruments in developed countries, lack of banking services and infrastructure limits their use in developing countries. This creates opportunities for alternative electronic payment (e-payment) schemes to cover the gap between the informality of cash and the heavier communications infrastructure that debit cards require. Many e-payment initiatives in developed countries have failed, because customers are not convinced of their need or practicality. More developed markets in Asia have taken the lead in devising schemes that have met with success. Some of these Asian solutions are now finding their way back to Europe. The case studies present the following lessons:

• Schemes that have developed within captive, niche markets, where they can exploit unique advantages over cash, have met with success;
• Customer convenience and speed of transaction are important;
• Payment enablement needs to be conceived as an ecosystem, not as a service.