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Will mobile card readers dethrone cash?

Total cash volume in POS transactions fell 10 percent from 2012 to 2013, while mobile and prepaid card payments surged. A sign of things to come?

August 5, 2014 by Jim Ghiglieri — Senior Vice President, Corporate Communications, SHAZAM

The point-of-sale landscape continues to change and evolve as mobile payments use climbs.

Total cash volume in POS transactions fell by 10 percent from 2012 to 2013, while mobile payments and prepaid card use saw an upsurge.

This is according to the new Javelin report, "2014 Retail Point of Sale Payment Forecast: The Mobile Payment Square Effect and Prepaid Card Popularity Drive Cash Down by 10%."

The data indicate that traditional paper-based payments, including cash and check, are increasingly losing out to alternative payments. In fact, cash payments at POS terminals totaled $788 billion in 2013.

That's down $86 billion from the previous year, and Javelin predicts the total to drop to $711 billion by 2019, amounting to $100 billion in total sale volume loss over the next five years.

Even so, cash remains the most commonly used payment option for in-store purchases. Specifically, the report found that 65 percent of all consumers used cash to make a purchase in the seven days prior to the report's release.

Further, debit and credit continue to dominate overall POS spending. However, increased affordability of mobile readers will likely bring further change to these facts and figures.

"For years, many small merchants have been unable to accept electronic payments due to high processing costs or an inability to support a traditional terminal," Nick Holland, payments senior analyst for Javelin, said in a press release.

However, with cost-effective options, such as mobile card readers offered by entities like Square, Intuit, and PayPal, more small merchants can now accept electronic payments. In light of this, Javelin forecasts cash's dominance to be worn away even further in the coming years.

Javelin's findings are in line with ABI Research's data on mobile POS terminals. ABI predicts the installed base of mobile POS devices will increase fivefold, reaching 51 million by 2019. This will amount to 46 percent of the overall POS market.

With continuing growth in mobile payment readers at the POS, it's important to make sure you're continually working to remain competitive in the world of emerging payments technology.

cover photo courtesy son of groucho | flickr

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