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Ketharaman,

I love your optimisim on the cash front, even if it is grasping at straws. 

BTW Blockbuster is closing all their remaining stores:
http://www.chicagotribune.com/business/breaking/chi-blockbuster-to-close-all-stores-20131106,0,2509893.story

10 years ago you would never have predicted that based on the data. You would have said I was crazy if I had suggested that the internet would kill video stores like Blockbuster, or bookstores like Borders. But it did...

The problem with your analysis is it is predicated on consumer behavior around payments not fundamentally changing. In the thousands of years of commerce, payment behavior has been constantly changing. The assumption that cash is impervious to these changes is like suggesting that Blockbuster is wrong to be closing those stores!

Consumer behavior is the killer app - if you don't respect it, it will kill your business. You, my friend, are more enamored with cash as a concept than you are with the underlying reason for cash - in that it enables you to buy stuff. Once the value ecosystem around buying stuff changes, the method of payment will shift - as it always has historically. To suggest otherwise would suggest you believe consumers who are constantly adapting and changing, will suddenly buck those historical precedents and do something totally uncharacteristic.

This is not about "The End of Cash" - it is about why we use cash, and the underlying assumption that our current method of paying (with cash) can not be improved upon. 

That, my friend, is just crazy talk...

BK 

Alex,

Maybe it is a little esoteric for you.

Point 1. Rewards programs are marginally profitable, and rely on significant numbers of customers not cashing in miles/points/rewards to stay profitable

Point 2. Mobile is increasing likelihood of cashing in miles/rewards, thus causing marginal programs to become costly/potentially fail

Point 3. Core premise of rewards programs - to simulate spending - are likely to be displaced by new value systems around loyalty and context as better drivers of engagement/stimulus than rewards

The value is not in getting you to spend, the value is in providing value. Rewards don't cut in that light.

That's the futurist perspective. Study S&H Green Stamps and when you see why they failed, you'll understand why credit card reward programs will also fail - value system fundamentally changes around modality/drivers.

BK

Who needs Bitcoin when you've got rewards/points/miles? I do wonder if US regulators are as concerned about Amex Rewards as they are Bitcoing however...

@Eric

You are absolutely right. In fact, the great thing about context and value is that before a payment you will have the ability to not only see how much money you have in your account, but you'll regularly ask your phone if you can afford something - and it will tell you.

The core bank account of the near-term will be more about value advice and context of your money than the current system allows.

Glad we got that settled...

@Alex

So let me get this straight? If I change the title to "Payments are becoming invisible" instead of disappearing, and I change references to disappear in the text to invisible and/or transparent, you agree?

@Neil

Correct, but that's what I'd refer to as a hygiene factor in the future. Minimal impact to the customer, but has to work everytime, seamlessly.

@Alex

I believe you missed the point entirely - remember telco networks making a call? The payment disappears in that there is no 'instance' of the payment. A customer doesn't authenticate, doesn't put in a PIN or password, doesn't swipe, doesn't tap, doesn't chip and pin, doesn't pull out his wallet, doesn't push a button, doesn't use his fingerprint, doesn't have to open a special app, doesn't have to scan a QR code, doesn't have to bump - nothing. 

The payment happens, but it is invisible to the user and embedded in a more important interaction - catching a taxi. The value of the payment network and experience is that it enables the payment as simple and as frictionlessly as possible. That is all - the payment itself is of no value except that it enables the commercial interaction. Even if you argue they had to authenticate at some point with the Uber app, or that at some point they had to set up their card details with Uber, that has no impact at the instance of an Uber trip where the customer simply exists the vehicle and the payment is executed at the back-end.

Where this leads to is that all payment networks must strive for maximum efficiency and minimum friction to be of value in the future. This also explains why cash still exists in the system, because it is hard to make payments simpler than using cash. 

You can disagree all you like, but the facts are that an Uber customer doesn't make a conscious or deliberate 'payment' in the experience. He chooses Uber because he trusts that the service will be offered, and that the payment will be executed seamlessly. The fact that the payment gets initiated by the driver and then goes through Uber, to Braintree, to a Processor, through the card network, authenticates via the bank, and sends the approval back through the processor so that Uber can issue a receipt is invisible to the user - and that's the point.

The more you fight to make the payment a distinct moment, the more you are fighting the inevitable. 

Friction is what kills incumbents.

BK

Liz,

Is this what you really are trying to say?

https://www.finextra.com/blogs/fullblog.aspx?blogid=8333

BK

I heard a mother of 5 in Starbucks proclaiming how easy it was to pay with the Starbucks app - does that count?