Can a Town go too Digital for Payments
So imagine yourself visiting a place; a good size country in Europe with 100m+ tourists each year and going to a touristic region within that country. The region itself boasts some 17m bed nights booked per year, an annual tourist turnover of €908m through some 200+ hotels, 180+ campsites, 40+ marinas with over 13k moorings.
You visit the capital of the region, with a population of some 50,000, and many tourists visiting and staying. The first thing you will want to do is spend some money. Okay so we trot off to the local supermarket with our trusted cards, Visa or MasterCard take your pick.
“Sorry Sir, we only take VPay or Maestro, Visa and MasterCard are Credit Cards, we do not accept those.” Despite protestations that your Visa and MasterCard’s are Debit cards; despite then offering prepaid cards; no Visa and MasterCard are a Credit Card brand to them not a debit brand. Credit Cards come with high interchange fees so they do not accept them. Of course they also accept the national debit scheme that all the locals use – do I have one of those, sorry No.
No worry, as any good traveller knows you always have a ‘little bit’ of cash in reserve so you wander down to the nearest bank branch in the city, not a local bank mind you, a big national brand. Walk in and look to change money, ah a little problem. It turns out not only is there not a single bank, or post office, or money change place in the city that can change cash. No worry though you are quickly pointed to a nearby city where you can change money, only 50 miles away! Yes that is the closest place everyone can think of.
So the only choice you are left with is withdrawing money on an ATM, and on that day they advised you as well that only €50 notes were available, a huge FX mark up and charge from your local bank – but you have money.
So is this all a dream, a nightmare that might happen. No it is reality, a provincial capital in the Netherlands called Middelburg and yes it happened to me!
The Moody’s research for Visa found that increasing card usage (sic electronic payments) by just 1% translates to a 0.024% increase in GDP without any other activity. So maybe we should be congratulating them for driving the city of the business into digital payments. Yes it does sound great, but it also raises the real issue of acceptance.
As the world becomes more and more digital the need for ‘your preferred type/brand’ of digital payment to be accepted becomes greater. After all if you cannot easily fall back on ‘cash’ then the acceptance of the wallet/card of your preference becomes paramount.
There is of course the argument shop-keepers and businesses will always look to accept whatever form of payment they believe their customers will want to use, that is great for the 80:20 rule. But what if you are one of the 20%, in the past the fall back has always been that ‘little bit of reserve cash’. Could we now start finding places like Middelburg where that little bit of reserve cash no longer works?
As the world becomes smaller more and more people are travelling from different places, the inter acceptance of payment marks is going to become increasingly important, especially in places where you may find yourself one of the 20% unexpectedly. Oh and in Middelburg, being English in Sterling is very much one of the 20%, the 80% all come from Euroland, with Euros, Maestro and VPay!