The Future For Money

By Jorn Lambert


Valentina Brostean

The shift away from cash and the emergence of the digital economy has been accelerated by the COVID-19 pandemic, and it’s permanent and far more inclusive, writes Jorn Lambert

Something extraordinary has happened to humanity’s relationship with money. Accelerated by COVID-19, recent times have redefined what money is and what it can do. It is a shift that is all-encompassing, transforming how every business in every sector in every country of the world operates. It is a movement that is revolutionising how entrepreneurs scale their businesses and how the world’s most disadvantaged people become financially enfranchised. It is the emergence of the global digital economy—and it is permanent.

The way in which the digital economy is structured—and how it is evolving—is such that the future of money is almost unrecognisable when compared to the concept of physical currency. Paper notes and coins were of course a necessity: but they were cumbersome, finite in their impact, restricted by geography and relatively untraceable.

Now we can move money in real time and at any hour of the day, helping more markets flourish by streamlining transactions and expanding the availability of digital money to hundreds of millions more people. This work has been particularly beneficial during the pandemic, with more people and governments seeking alternatives to physical cash. Digital money has broken international borders by enabling the private and public sector to collaborate to connect people around the world wherever they are.

The democratisation of money

The future of money lies somewhere in a yet to be defined sweet spot that combines the power of artificial intelligence with digital banking, payments driven by digital wallets, cryptocurrencies, open banking, and the ingenuity of fintech innovators along with the irreversible trend of smarter devices and better data connectivity for everyone at all times. Money has never been so democratically managed, or by so many different players.

While some may perceive this democratisation of money as a threat to the established order, we foresee a more collaborative future where demand for convenience and anonymity will be balanced with invisible and persistent security to safeguard the interests of all participants.

We can expect to see central banks respond to these demands with regulations designed to enable this democratised future while protecting participants from fraud and manipulation.

Developments in cryptocurrencies provide an interesting study. Unregulated cryptocurrencies and its inherent anonymity has resulted in a lack of transparency and unexplainable volatility which ultimately puts its participants at risk. In response to these risks, new asset-backed cryptocurrencies, or ‘Stable Coins’ are emerging to support the goals of user anonymity while protecting the ecosystem from wanton risks.

“It is nothing short of a revolution in the relationship between money and the man on the street”

Jorn Lambert

By announcing exploration into central bank-owned digital currencies, many regulators are also using stable coins to reduce the cost of cash, advance financial inclusion, lock in security and take the sting out of unregulated cryptocurrencies. These developments demonstrate how the future of money will extend itself into stable coins as well. Mastercard has invested in cryptocurrency assets for several years and is the leading payment player when it comes to patents around cryptocurrencies.

Open banking presents another fascinating vision with its potential to enable fintech and innovators to improve customer experience and value in the payment ecosystem. Consumers will be able to pay businesses directly from their bank accounts and have real time and frictionless experiences as they share their financial details for opening a new account or manage their money from one place or get a loan sanctioned immediately. This truly enables the democratisation of money by letting the consumer choose where and how they want to use their money.

An ethical dimension

There is also a societal and ethical dimension to the digital economy and its effect on the future of money. The acceptance network technologies that Mastercard excels in will deliver a historic level of security, convenience and privacy when paying digitally. As these technologies become rooted in the world’s payment infrastructures, money laundering and the financing of terrorism will become even harder.

Aided by the improvement in technologies around biometric recognition, it will soon be common to make payments almost seamlessly with voice or facial recognition backed by the highest set of industry standards on security.

Of all its impacts, the two most important societal dimensions of the digital economy are financial inclusion and the development of a more inclusive economy. Fintech solutions can ‘oil the wheels’ of the entire economic system, enabling trade across borders, and boosting trade within and between regions. Intra-African trade, for example, is enormously enhanced thanks to the enabling nature of the digital payment’s ecosystem. This is what small and medium enterprises (SMEs) need to excel at.

Indeed, the enablement of SME success through new fintech solutions and services is critical to sustainable and inclusive economic growth. SMEs directly contribute to the growth of the global economy and progress towards the Sustainable Development Goals, which is why supporting them is crucial to building back effectively and efficiently. A digital economy can spur consumer spending and sustain livelihoods, while seamlessly enabling governments to collect fees, disburse payments, enable small businesses and look after citizen wellbeing. Mastercard’s Micro Credit Programme gives small retailers and merchants access to credit and helps them to break the cycle of cash dependence that will foster growth for the world’s micro-businesses.

“It is nothing short of a revolution in the relationship between money and the man on the street”

Jorn Lambert

Partnerships are key

Enriching and enabling the digital economy is not, therefore, the desperate plea of the developing nations—it is a fundamental, structural prerequisite for sustainable socio-economic development in each country.

The exciting news is that there is enormous enthusiasm for digital payment tools. The Mastercard New Payments Index shows that 95 per cent of consumers in the Middle East and Africa say they will try cryptocurrency, biometrics, contactless, or QR code in the near future.

Solutions like Click to Pay will address this enthusiasm by avoiding the need for consumers to manually enter their card details during an online checkout or to store these details with multiple merchants.

Partnering with fintech innovators and large digital wallets is imperative as we collaborate to develop a robust and inclusive digital economy that positively impacts communities.

This approach, and other programmes, reflect the underlying good that comes from the shift away from cash towards a digital economy. It is nothing short of a revolution in the relationship between money and the man on the street—and it is permanent.