Modern Money Management Abroad
At a recent money event, Lift, held in Geneva, one man predicted that today’s economy and financial system needs to change – fast. David Birch, Director of IT consultancy, Consult Hyperion, boldly predicted:
- By 2030, our financial system will collapse, because it is not sustainable and cannot recover from shock
- 2012 will see the collapse of the Euro, bringing global change
- 2050 will see a heterogeneous financial system called ‘Many Hands’, which will enable resilience and ensure stability
- City states will replace nation states as the base of commerce and trading
- The top 50 cities in the world (C50) will provide inhabitants with financial protection
The Many Hands financial system will see an overhaul in the way we pay for things, particularly abroad and in inter-continental transactions; coins will be a things of the past. Many companies are tapping into this future market already, offering people a choice of convenient, card- and coin-less methods of carrying out transactions.
British startup, GoCardless, allows businesses and individuals to access the direct debit network, acting as an API for bank transfers. This has previously been limited to large organisations such as mobile phone and household bill companies. Now the average consumer can have access to bank APIs that operate the direct debit system, with the following advantages over traditional means of payment:
- GoCardless has set up a system that works with all recognised banks, allowing universal access
- The company has created an API that enables small businesses and individuals to cheaply take direct debit payments; this removes the need for credit card fees or having an expensive seller account.
- Removes inconvenience of complicated merchant accounts and long-winded registration processes
GoCardless has built the infrastructure that is needed to take these payments, never charging more than £2 per transaction – largely undercutting any other existing transactional service.
Contactless payment methods are becoming increasingly popular and widely-used, especially when travelling. Near-field communication (NFC) and QR codes (which allow consumers to pay for things via a barcode that they scan through their mobile phones) eliminate the need for cash exchange, or expensive debit card charges when abroad. The desire is there for them to grow:
- Two-thirds of UK shoppers say cash is inconvenient – Barclays 2011
- By the end of 2014 some 300 million devices will be able to offer their users 'tap and pay' through NFC Juniper 2011
- 9.8 million Japanese mobile subscribers used their mobile phones to make payments in December 2010 Telecommunications Carriers Association Japan (2011)
People are combining their wallets and mobile phones to make paying for things quick, simple and cheaper.
American company, Bitcoin, is a digital currency that enables individuals of businesses to make a instant payment to anyone, anywhere. There is no operating central authority – it is managed collectively by a central network – as Bitcoin works on a peer to peer basis.
- Its infrastructure has been designed on the model used to protect information in computer systems (cryptography) to control simple creation and transfers of money.
- It enables its consumers anonymity, as transactions are untraceable – it is basically like using cash, but through the virtual system. However, according to recent articles about Bitcoin
- The number of ‘bitcoins’ allowed in circulation at any one time is capped at 21 million to protect users against fraud