Technology is changing pretty much everything these days, including money and even what we think money is.
Bill Maurer is the Dean of Social Sciences and an Anthropology professor at UC Irvine. He studies and navigates the brave new world of alternative payments — things like using your cell phone to pay for your coffee or Amazon rewards points to buy a new TV.
"Mobile is really shaking up the payment space, and opening up new vistas for innovation and entrepreneurship," Maurer says. “People always joke around about how the mobile has replaced the wallet as the thing that people fear losing or leaving behind most. People can go through the whole day without their wallet and not really stress out about it too much, but really get anxious when they don't have their phone nearby or if their service goes down."
But mobile payment systems have quite a bit of work to do before replacing things like cash or credit cards. “Human behavior changes very slowly, in the money domain in particular. The coin is a 5000-year-old invention. It hasn't gone away. It'll be interesting to see is whether or not some of these payment innovators or money innovators are able to get people to make the jump away from using any kind of physical token altogether and to just let things happen say on their phone, or let things happen in the internet ether.”
Maurer says companies also benefit from alternative currencies. "On the business side there's quite a strong case for mobile,” Maurer says. “Because of the kind of data that it allows folks to capture, to learn so much more about consumers, and their behavior, and their desires and to start developing … around that data.”
Imagine knowing what a consumer is thinking or doing at the exact point of purchase or when someone uses loyalty points from a credit card. Maurer says alternative currencies can help gather more data than cash or check payments, "so you've seen a lot of experimentation going on with things like loyalty points, and trying to kind of envision whether or not a loyalty point could serve as a kind of private token or private currency.”
Things like credit card rewards and company loyalty points could move into that space that cash once lived alone, but Maurer thinks government regulation might hamper its rise. “Regulators might curtail [alternative currencies] simply because there are a number of consumer protection issues. There’s a number of risks.” He uses the example of a credit card program. A consumer can accumulate a bunch of points, but what if that company decides the points no longer have value? That could be why cash, still, remains king.