Editorial Articles

Money is changing fast. Traditional means of payment that have served us for generations are being replaced by faster, more convenient ways to pay.

Back in December, the UK Payments Council signalled the end of the cheque in 2018. The move reflected the dramatic decline in the use of this 350 year old payment method. Today, we prefer to pay by credit or debit card on the high street, and to use online payment services such as PayPal on the internet.

The hallowed phrase ‘the cheque’s in the post’ reflects the uncertainty involved in such a leisurely method of payment. In 2010, the idea of paying with a piece of paper that then embarks on a slow journey through ‘clearing’ seems quaint, if not bizarre.

So what does the future of money look like? In a word: digital. Coins and banknotes are unlikely to disappear any time soon, but electronic money is already ubiquitous. According to David Birch from the Digital Money Forum, cash payments represent just 4 per cent of all payments in Britain by value, according to Bank of England statistics, although they still represent over half the number of transactions, given the huge number of tiny payments by cash.*

As we move towards a world without cheques, we’re likely to see a boom in payments by mobile phone and other platforms. The new generation of smartphones such as the iPhone and BlackBerry have given a huge boost to mobile services. For the first time, it’s becoming as easy to do things online on the go as in the home or office. PayPal saw the potential early, as it was created to enable people to ‘beam’ money to each other via Palm handsets. Ten years on, that vision looks like it could be coming true on a big scale – letting us pay our plumber or gardener through our handset, rather than by cheque.

Last year, PayPal went a step further and opened its payments platform to developers, to help them build new ways to pay on mobiles and other platforms. It means that consumers won’t have to log in to PayPal’s website to make a payment – they can do it securely and quickly in other ways – for example, from a handset or even within a computer game. In a few years, the idea you have to use a desktop or laptop computer to make an electronic payment will seem as old fashioned as the cheque.

The other major development will be micropayments, an option that PayPal has pioneered. At present, cash is the obvious way of making small payments. But that’s not an option when buyer and seller aren’t in the same place. As media and other organisations seek ways to make money from their online content, we’re sure to see new micropayment services develop over the coming years. In the same way, the rise of social networking sites such as Twitter and Facebook has given opportunities for innovative services such as Twitpay, which enables people to send money via Twitter using PayPal. Twitpay is an example of the new initiatives that have been made possible by PayPal’s decision to open its payment platform to outside developers.

The next ten years will be the digital decade. Money will be no exception, and PayPal will continue to pioneer the future of payments.

Carl Scheible
Managing Director, PayPal UK

* David Birch blogpost, 11 January 2010,
http://digitaldebateblogs.typepad.com/digital_money/2010/01/lies-damned-lies-and-my-statistics.html