Expert: Mobile Payment to Cut down Black Market Economies

NFC-mobile-payment-cut-down-black-market-economies-rfid-blogCash is used to fuel black market economies, which encompass tax evasion activities, drug dealing, and money laundering, said David Birch, head of the UK electronic transactions consultancy firm Consult Hyperion. He thinks the best way to address these issues 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. “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 viable technology to supplant 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. 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.

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.

Birch thinks that 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. 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.