Scratchcards’ success is down to their ability to convince both customers and merchants of their worth. The cost, energy and time issues are solved for customers, and merchants like them because they result in increased footfall. This is the challenge faced by electronic means of storing and transacting wealth. Customers will only use electronic means if they can spend their money in their local area. Merchants will only accept electronic means if they believe customers will use these means. These two factors go hand in hand, and represent a chicken and egg trap that is difficult to break out of.

Breaking out of the trap

There are ways of breaking out, however, and they involve consolidation, different stakeholders working in their areas of expertise, and building on what we have already. Safaricom’s success with M-Pesa was down to its ability to use its pre-existing merchant network as a means of pushing electronic payments. If we can figure out clever ways of using existing networks we can break out of the chicken and egg trap.

It needs all hands on deck, whether the private or public sector, the more the better. There is a lot more need for consolidation in the industry. Regulators are now helping, forcing people to play together nicely. The next level of consolidation is creating specialist roles. From our perspective the focus is on the retail point of transition, of transactions and whatever physical logistics serve that point. We play a very narrow role in that, bringing together the main advances into our products and services without losing touch with the merchant. Other players need to find a niche where they can excel, and then we can all work together.

Clearly, though, a move away from cash would be beneficial for all concerned, both customers and merchants. I lost my wallet recently while travelling, had no credit card, and was operating only with cash. It is amazing the level of risk you’re bearing. Now imagine if every cent you owned was on your person or in your bedroom. Mine was a small fraction of the worry that many unbanked people bear.

Aside from the risk element, there are financial benefits too. If you sit on cash you are losing money, missing out on the ability to participate in the likes of shared savings schemes. Energy and time come into play here too. Merchants need to pay suppliers, and by eliminating time and energy expended in handling cash, can improve their businesses.

The benefits are clear, and we are on the road to realizing them. Just perhaps not as far down the road as many think.