Mobile phones the only tech to rid dirty money: Expert

Summary:Using cash for payments has become unsustainable, and mobile phones are the only viable technology to supplant cash, according to Consult Hyperion Director David Birch.

As head of the UK electronic transactions consultancy firm Consult Hyperion, David Birch said in many countries, cash is used to fuel black market economies, which encompass tax evasion activities, drug dealing, and money laundering.

Birch claims that this situation is a result of ever widening tax gaps between different income brackets and the best way to address this issue is by replacing cash with mobile phones.

"In a country like Norway, which is by no means a lawless country, something like 70 percent of all the money in circulation is only used for criminal purposes," Birch said at the Future of Payments conference in Sydney. He noted that almost none of the money in Norway is used for retail purposes.

"Even in a relatively law abiding country like the UK, the black economy is heading towards becoming a quarter of the economy," Birch said.

With the rise of innovations such as NFC payments, Google Wallet, and Apple's Passbook, Birch firmly believes that the mobile phone will be the only technology capable of getting rid of cash.

"That's because the mobile phone is a point-of-sale (POS) terminal, not because the mobile is a card," he said.

Smartphone uptake has soared in recent years, and nearly everybody in the world has a mobile phone — or two. With everybody able to have a POS terminal in their hands, the idea of freeing ourselves from cash becomes a plausible outcome, according to Birch.

"If the payments industry made a concerted effort with regulators and law enforcement bodies to use this technology to drive out cash, everybody would be better off," he said. "The social cost of cash goes down, and it has other benefits as well."

The roll-on effect of a cashless society would be less money-related crime, according to Birch.

He highlighted some of the anti-cash movements across Europe, which are driven by workers and retailers to stave off armed robberies.

"The reason why I love mobile and hate cash is because there is a moral component to it — things like this can make a big difference," he said.

Thanks to the global financial crisis, which has lowered confidence in incumbent payment systems, there is now wider acceptance in using alternative currencies such as bitcoin, according to Birch. Payment companies need to make a note of this trend if these alternative technologies continue to gain momentum, he said.

"The idea that the US dollar is somehow more real than the Bristol pounds, or World of Warcraft gold pieces for that matter, is ludicrous," Birch said.

Topics: Banking, Australia

About

Spandas forayed into tech journalism in 2009 as a fresh university graduate spurring her passion for all things tech. Based in Australia, Spandas covers enterprise and business IT.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.