Could the cashless economy finally be here?

Since the first stirrings of the dot com boom, we have been told that cash is on its way out, and electronic money is around the corner. Next week, on 14 February, is the fifth anniversary of the switch to chip-and-PIN cards in the UK – the only really significant step that has been taken towards that goal in the last decade.

But in the first few weeks of this year, there have been an unprecedented set of announcements that suggest that the e-money wallet is about to become a widespread and viable technology.

The key to this move is near-field communication (NFC), short-range wireless connections that allow electronic devices such as mobile phones to conduct financial payments. The technology has been in existence for some time, but has been held back by a classic chicken-and-egg situation. Phone makers didn’t want the expense of building NFC chips into their handsets if there were no retailers willing to accept the devices.

Now that Apple is rumoured to be on the bandwagon, more firms are starting to take NFC seriously.

Reports suggest that the next versions of the iPhone and iPad will include embedded NFC. Everything Everywhere – the owner of Orange and T-Mobile – is working with Barclaycard to launch a mobile phone payment system later this year. And O2 has applied for an e-money licence to allow it to offer NFC-based payment services.

Add to that the confirmation from McDonald’s that it is to accept contactless card payments for low-value transactions at all its UK stores by the end of the year, and you can start to see that the pound in your pocket is about to be replaced by something else.

Even BMW is getting in on the act, proposing that NFC-enabled car keys could be used for e-money, access control and transport ticketing.

Technology is increasingly taking over every aspect of how we live, which is good news for all IT professionals. With the focus on data security and privacy, let’s also hope the industry has learned how to get it right once we start sending cash through the airwaves.