The Motley Fool

Has Apple just announced the death of cash?

Tech giant Apple’s announcement of new iPhones with near field communications (NFC) chips and its Pay technology could be the start of the end for cash payments.

While Apple suggests that Pay will end the 50-year old credit card technology, it may well be centuries old physical cash that is most at threat.

Many modern Android phones already come with NFC chips in them – and Android has a dominant market position – so Apple’s NFC and Pay announcements are not exactly breakthrough technology. According to estimates early this year, Apple’s market share in Australia was around 35%, compared to Android’s 58%. In the US, Apple is reported to have a 42% share of the market, with Android at 51.5%.

But it may start the dominos falling, with a greater take up of smartphones by consumers, and more use of cashless transactions. Mint Wireless Limited’s (ASX: MNW) CEO Robin Khuda says its great news for the company and its partners, as digital payments grow.

As an aside, yesterday I suggested that Apple’s Pay technology was a major threat to Mint and Mobile Embrace Limited (ASX: MBE). Upon reflection and contact with both companies’s CEOs, Apple’s Pay won’t be competing with either company, and in fact, could be a nice tailwind.

Apple’s NFC chip may well work with existing terminals such as Visa PayWave and Mastercard’s PayPass out of the box, meaning consumers can use their phone to pay for goods up to $100 by waving their iPhone in proximity to the reader.

In Australia, most of us will be familiar with using our credit or debit cards in a similar manner already. In the US, that’s virtually unheard of. Neither Mastercard nor Visa have rolled out chip and PIN technology in a major way in the US, but the ball is starting to roll.

When you think about the convenience of just waving your phone near a NFC reader to pay for goods, paying with cash – which you had to withdraw from a bank, ATM or EFTPOS machine in the first place – and then receive any change, is already beginning to seem archaic and cumbersome.

This could be the beginning of the end of cash.


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Motley Fool writer/analyst Mike King owns shares in Apple. You can follow Mike on Twitter @TMFKinga

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