Smart technology and the digital revolution has revolutionized the way we pay for goods and services. We are living through the fourth revolution which is characterized by a fusion of software technologies such as artificial intelligence (AI), the internet of things (IoT), and blockchain which is transforming the way we do business and pay for things.
The digital payments market is forecast to grow at a compound annual growth rate of 13.7 percent between 2021 and 2026 according to ReportLinker – a demand driven by greater convenience, favorable government policies and evolving consumer behavior, as well as COVID-19 disruption. Moreover, payments made via mobile devices alone are expected to exceed $2 trillion globally by 2023.
The pandemic has accelerated this process with contactless payments becoming the norm in most countries.
For example, in less than a decade the proportion of Americans who do not use cash in a typical week has increased by double digits. In a 2022 survey by Pew Research Center roughly four-in-ten Americans (41%) say none of their purchases in a typical week are paid for using cash, up from 29% in 2018 and 24% in 2015. Conversely, the percentage of Americans who say that all or almost all of their purchases are paid for using cash in a typical week has steadily decreased, from 24% in 2015 to 18% in 2018 to 14% in 2022.
In the UK, 3,300 retail bank branches have closed since 2015 as consumers migrate to online banking, meaning that two thirds of the network has closed over the last 30 years. ATMs are also rapidly being closed too. In the last six months of 2018 almost 500 a month were being shut down in the UK according to the ‘Access to Cash Review’. The review also highlights that cash is only used for three in every ten transactions in the UK, down from six in ten a decade ago and is forecasted to drop to one in every ten transactions within the next 15 years.
Even in traditionally cash based economies like India, recent trends show it is rapidly switching to digital transactions with the Indian economy predicted to reach $1 trillion in digital payments by 2026.
Yet historically the maritime industry has paid crew either by sending a wire transfer on behalf of its crew members to a designated bank or sending cash directly to the ship – a very costly and inefficient way to administer onboard pay.
If you look at the way employees are paid in other industries outside shipping, the notion of a cash payment is inconceivable in today’s tech-savvy society.
The pandemic and Ukrainian conflict has also certainly helped to focus the minds of ship owners and crewing agents into looking at alternative methods of paying their seafarers as cash deliveries to vessels were impossible given the world-wide restrictions caused by the pandemic. Similarly, the conflict meant many Russian and Ukrainian banks were inaccessible.
So, the fintech revolution has provided the means for the maritime industry to pay its seafarers digitally with the added bonus that these options are more cost-effective and provide better functionality with smarter solutions for both the crewmember and the employing company.
One such option is using a pre-payment card solution which enables employers to send electronic payments to individual crew members’ cards, avoiding expensive wire transfer costs.
This solution not only significantly reduces the need for vessels to have cash onboard but also removes time-consuming administration for both the ship owner and Master.
Pre-payment cards allow crew the flexibility to directly manage their wages providing them with immediate access and control anywhere and at any time in a very cost-efficient manner With ShipMoney, seafarers can deposit, hold and manage over 100 currencies within a singular account simultaneously. They can send payments worldwide 24/7 using ShipMoney’s online platform which has been designed specifically with seafarers in mind, enabling them to use Western Union and MoneyGram to send money to family and friends. Maritime employers can also process bulk payments with ShipMoney’s simple file upload functionality, significantly reducing administration.
Shipping companies can also automate payments by integrating their finance and accounting systems with ShipMoney’s corporate payment system.
Giving employers and employees the power to digitally manage their money is certainly a more flexible solution and less of an administrative burden so this could mean that cash becomes a relic of the past.
With these trends being repeated around the world, how long will cash remain part of the global economy?