By removing some of the physical constraints in squaring up with friends and family, social media service providers have helped to ease the informal interpersonal transactions that many of us engage when collaborating on a purchase. What used to be a cash or check deal between individual can now be complete with a press of the finger.
But the rapid growth of social media payments won’t damage the banks, believes Michael Rolph, co-founder of yoyowallet, a UK-based mobile payments loyalty app. Instead, they’ll see it as an opportunity.
“Banks will be happy to see the movement of money into digital form rather than cash,” he says, pointing out that moving coins and notes around is an expensive and time-consuming activity.
Mercator Advisory Group recognizes interpersonal digital exchange of funds reduces the need for cash and checks, as well as the associated services banks provide in handling these means. Based on this, one might believe financial institutions would be less needed to facilitate these informal transactions. That may be the case eventually, but the migration will be gradual, and there will remain use cases for cash are not likely to go away anytime soon (lack of wireless signal, lack of power).
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
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