IN an ideal world, I would spend the first part of my morning sitting at a small outdoor cafe, drinking my espresso, reading the newspaper and enjoying a small cigar.
At the end of such a stereotypical ritual, I would stand up, pay in cash and leave. That world existed, or at least, it manifested in good approximations but is now almost completely forgotten.
While the ethical state is fighting hard to deprive us of tobacco pleasures, technological development has killed printed news and banknote payments. Like in the song Video Killed the Radio Star.
Do not get me wrong, I am not against technological development, quite the contrary. I just tend to be nostalgic. Surely, I would prefer to keep on buying books in bookstores – and I still do – but there are plenty of books I would not have access to without Amazon and its international shipping service.
As economist Joseph Schumpeter described very well, innovation will always be there to challenge the traditional way to do things and it will always find people like me who will struggle to abandon the good, old ways. Innovation can be defined as such only if it encounters the market favour from the bottom-up.
The innovation I find difficult to get along with is cashless payments. It took me years to start trusting credit cards, and now I have my issues with QRs and e-wallets.
I still remember the beginning of my corporate career as an international salesperson, travelling around the world with envelopes filled with different currencies, just to realise, years later, how practical it was and is to keep just a minimum amount of cash for emergency and handle the rest with credit cards.
Indeed, QRs and e-wallets are simply a further step in the same direction, building on the advantages created by credit cards.
As is easy to understand, travelling internationally with enough cash to perform all the necessary operations is definitely inconvenient. Furthermore, on the international scale, we only see a higher-level version of what could also be an issue in daily domestic operations: safety.
Cash can easily be lost or stolen without any backup procedures, unlike credit cards and apps, which offer options like blocking, resetting passwords and more. Cash, once lost, is just gone.
Moreover, if properly designed, electronic payment systems can reduce transaction time and, with it, transaction costs.
As an international traveller, I remember the endless discussions with taxi drivers eager to exploit a foreigner with the “no change available” excuse, which often meant I had to leave unintended tips.
With electronic payments now linked to transportation, that excuse is gone for good, and the transaction amount can be known in advance, saving time that would otherwise be spent on bargaining. The same goes for situations where coins are needed for public transport and similar scenarios.
Additional costs that can be saved are the so-called “shoe-costs” represented by the need to keep going to ATM machines for cash withdrawals, only to find them broken, needing to search for another one or struggling to locate one from your bank that does not charge a withdrawal fee, among other inconveniences.
In fact, quite recently, individuals have protested the RM1 withdrawal fee, which, however, should be a matter outside the government’s control, as it is a private transaction between financial institutions and their clients.
Another important advantage is the instant access to transaction history and cash balances, allowing users to stay informed about their financial situation and avoid being caught by surprise – provided they familiarise themselves with the available tools.
In a nutshell, recent evolutions involving payment systems represent important milestones towards quicker, cheaper and safer transactions. While they will undoubtedly face opposition from nostalgic individuals like me, the trend cannot be stopped – innovation has already won consumers’ favour.
However, more needs to be done for a broader education, not only about the advantages of the new system but also about the proper use of the control tools associated with cashless payments. This is to prevent users from falling into the trap of losing control over their expenses.
Finally, while we embrace the unstoppable and triumphant march of innovation, let us allow dinosaurs like me the freedom to continue using the banknotes and coins we are attached to. Freedom of choice must remain a cherished value.
Dr Carmelo Ferlito is CEO of the Centre for Market Education, a visiting research fellow at Bank Negara Malaysia and a faculty member at Universitas Prasetiya Mulya.
Comments: letters@thesundaily.com.
