Digital money, including electronic payments over your mobile phone using virtual currency, will someday render cash obsolete
Cash faces stiff competition from electronic payment methods in the coming years as consumers realise the benefits of emerging technologies.
That's according to Gartner analysts who predict making payments through mobile phones using virtual currencies -- such as Second Life's Linden dollars -- could be a reality in the not too distant future, making cash obsolete.
Speaking at Gartner's ITxpo in Cannes, Gartner principal analyst Alistair Newton said: "With digital money, we believe we're on the cusp of the next revolution."
According to Newton, the first money revolution was the move to paper money, which proved it's possible for money to evolve without significantly causing problems.
Newton cited three developments contributing to the increasing digitisation of money: the consumerisation of IT, the globalisation of money markets and the basic convenience of the emerging payment methods.
He said: "It's easier for you as a customer to use electronic payment rather than cash or cheque. The whole digitisation of money allows greater flexibility."
But in order to work, Newton said the fundamentals of money need to remain -- namely security, value and trust.
Newton pointed to Transport for London's Oyster card scheme to demonstrate how money is already becoming outmoded.
A single fare costs £4 when using cash but less than half that when using an Oyster card. "Cash is being charged at a premium," he said.
Fellow Gartner analyst Adam Daum said: "We are moving into an environment where you will see a proliferation of global payment types."
But Newton admitted: "Cash is still going to be around but the pressure on cash will grow."