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  • Future fears: Money (Public domain)Source: Public domain
From bartering to coins, cheques, PIN cards and online payments - the world has constantly evolved the way we buy and sell commodities. With money, transactions, currencies and banking already changing rapidly, what does the future hold?
Delys Paul

18 Sep 2015 - 3:04 PM  UPDATED 1 Oct 2015 - 8:51 AM

From bartering to coins, cheques, PIN cards and online payments - the world has constantly evolved the way we buy and sell commodities.

With money, transactions, currencies and banking already changing rapidly, what does the future hold?
Delys Paul investigates.

Experts say the future of money will be powered by the digital world. Most of us have already incorporated internet banking and online shopping as part of our purchasing and payment routine. But the growth of the internet is likely to change the way we buy online.

Payment processing provider Mint Payments's Chief Marketing Officer Bjorn Behrendt says more and more household purchases will be done automatically by smart-appliances.

He calls it "the internet of everything."

"So in ten years from now everything will be connected, whether that is your refrigerator you know your alarm system your watches your wearables and what it allows you is that it will load up products that you need regularly will be replenished and paid for automatically and devices will be smart enough to know when a certain element of your household runs out. Amazon has already launched the Dash button that allows you to just replenish you toilet paper or whatever else with just one click on to a little device that connects via bluetooth in your home."

With more programmed purchases, Bjorn Behrendt says we'll need to keep a closer eye on our expenses.

''People you know need to be a bit more conscious about their spending and monitor their digital spending more closely because, so many payments will just happen automatically in ten years from now. " 

The digital economy is likely to remove the need to carry cash or cards around.
Bjorn Behrendt explains.

''What is going to hit Australia in the next 6 to twelve months are digital wallets, so Apple pay, Samsung pay and Android pay are going to transition the way we pay and you can basically can leave your wallet at home and all you need is either your phone or your watch or a different wearable that has a digital wallet installed on it.''

Paying at a checkout may also become a thing of the past.

Bjorn says ten years from now sensors installed in shops and roadways will be able to instantly detect what customers are buying.  

''So you can just walk out of the store essentially with the products under your arm and maybe some eye beacon like technology will then instantly know 'ah ok that person has just walked out with a toy with some milks and with some butter,' and you get charged for whatever you took out of the store so that is really got to really put a stop to any store theft.''  

Though the world is embracing digital technology and new payment systems, futurist and entrepreneur Ross Dawson says currency notes won't be disappearing any time soon.

''We won't see the extinction of cash for the, you know the foreseeable future. But absolutely you are moving to where most people will have very little cash on them or not needed for almost anything they need day today. ''

Some currencies exist only in the digital world. Bitcoin uses a peer-to-peer internet network for users to transact directly without an intermediary.

Ross Dawson says uncertainty about traditional banking systems are leading people to look for alternate payment systems like Bitcoin.

''One of the reasons why people like cash is in fact the safety of banks. Australia happens to have the safest banks in the world. Yet still around the world we have had people who are concerned about banking safety and feel that cash is a better store of value. But there are also people who are concerned about the future of governments and their financial situations and feel that necessarily currencies issued by governments may not be the best sort of value and which are pushing them into alternative currencies such as bit coin." He says regulation of these growing systems will remain vital.

''And this is something were which we need to have appropriate regulations or structures were this can happen safely for everybody. But we are seeing a more and more shift towards an essentially a decentralised financial system from what has been an extremely centralized system.''

Dawson thinks that rather than replacing national currencies, digital currencies will work alongside them.

''We have already seen that the Euro has had challenges and how broadly has it extended.  And we will still see national currencies issued by governments. But we will alongside that, see more and more shift to a common currency to which we can exchange such as bit coin or its successor. ''           
Ross Dawson says a casualty of the digital revolution may be your local ATM machine.

''The role of the branch is already shifting where we have ones which are highly automated plus ones which people go for advice on important transactions such as mortgages and so on. But we are also shifting where, as we don't need cash, the idea of automated teller machines start to make no sense. For the mean time they are well established, we probably don't need many more than we currently do given the shift. But over time it well be possible that ATM's, we'll have far fewer ATM's as we don't need them as much. ''

Unlike purchases made with cash, digital transactions are linked to user's details, providing companies with invaluable information on your likes, dislikes and other shopping habits.

''One of the significant implications is in terms of privacy. With cash, nobody knows who we are. With the digital transaction currently there are ways in which they can be tracked and people can companies can use that information to be able to market more effectively. So one of the things which is going to be critical is that companies actually, i they do they use it for consumers benefits as opposed to simply to be able to try to sell more things to them and I think we will get a significant backlash. ''

Ross Dawson says privacy could become a major concern to many Australians.

''The things that we want to buy, the path we don't want people to know about. And we have alternatives or we have ways to be able to make purchases that cannot be tracked. I think that the privacy issue is a very significant one. One which is I think Australian's are very, will take dear to heart. In the potential shift to a cashless society where anonymous transactions are no longer possible. ''

Others see the benefits of transparent digital transactions, especially for governments looking to tackle black markets.

CIFR King & Wood Mallesons Professor of International Finance Law, Ross Buckley explains.

''If the government was clever it would certainly be doing  everything that it could to support that transition to a cashless economy I think, because frankly it would shrink the size of the black economy itwould increase the tax base. Because if you had fewer payments being made in cash, payments made in cash to avoid tax would stand out, that would be much more obvious  and the technology is there.''

He says Hong Kong's Octopus smart card payment system is a good example of existing technology.

"If you go somewhere like Hong Kong more than fifty per cent of the transactions on the Octopus card now are not transport related. Octopus was introduced as a transport card but more than half of the transactions are now for small retail purchases  and over ninety-nine per cent of Hong Kong  adults own an Octopus card.''

Professor Buckley says while most people believe using cash is costless, they're not aware of the expenses involved in handling cash notes.

''There is a transport of cash, there is the deposit of cash by the businesses and the business collects cash, the business proprietor has to take money - time out of their day to take the money to the bank. The total expenses of dealing with cash are roughly the same as dealing with credit cards, you know 1.5 per cent something like that. So, cash is not free, it is just the hidden expense that the merchants incorporate into their prices."

Despite many innovations in money and transaction management, Professor Buckley expects banks will continue to dominate the payment industry.

"You know what will probably happen is that there will be digital disruptions, small companies will work out ways to provide new payment mechanisms and payment facilities. And as is the way of the things, in time the big banks will gobble them up.  The founders of those companies will become rich as they will be bought out by the major banks and the banks will take over the, that part of the action. That is probably how we are going. So, long term the banks are probably well positioned to continue to be you know front and centre in the whole payment system.''

Professor Buckley says major currencies will also continue to exist.

"Well I think the events in Greece would suggest that you know currency unions are difficult things to pull off. I mean there is a magic to flooding exchange rates which are that, when your economy is not doing so well your exchange rate tends to devalue and that tends to return your economy towards equilibrium by boosting growth by making your exports cheaper. So I am big believer in flooding exchange rates and probably not a big believer in fewer and fewer currencies and countries trying to operate on some sort of consolidated currency. So I don't think there is a really much chance the major currencies diminishing in number in the future."

What's the future for the Australian dollar?

Professor Buckley says it's likely to remain and not be turned into a currency bloc for Oceania.

"A simple example of about a decade ago there was a proposal for Pacific Island nations to adopt the Australian Dollar. Well when Australian Dollar was above parity with the US Dollar that would have been an economic  disaster for those countries. If they had done that you know it would have just you know destroyed their tourism industries and been and been extremely damaging. So you know I don't think that is where we are heading.''