Is cash at an end? This is one of the most important questions that companies, banks and financial service providers have to deal with. The demand for the abolition of cash is getting louder and louder,
especially in Scandinavia, payment methods from the mobile payment sector have gained more and more ground. More and more digital means of payment are on the rise, and one day traditional cash as we know it will probably no longer exist, not even in treasury. For companies, this is an important point when it comes to financing, both in internal financing through own funds, as well as in debt financing and raising capital via bank loans or crowdinvesting. Capital procurement is often very different with digital means of payment than is the case with cash.
Digital means of payment and virtual currencies
Bitcoin, PayPal, Google Wallet, Apple Pay, Samsung Pay, MasterPass, VISA Checkout, all these are important opportunities in the digital payment sector. While the latter represent solutions for payment transactions, which also play an important role for companies. Is the Bitcoin a virtual currency, which is likely to become more and more interesting for companies in the EU, also in terms of raising capital and financing, as the Bitcoin is now traded tax-free. This means that there are no taxes for the purchase and sale of Bitcoin within the European Union. To make investments, Bitcoin can be purchased, which can then be sold if financing is necessary when BTC, i.e. the price of Bitcoin, is at a high level. For treasury, Bitcoin is therefore an important area that large and small companies should think about.
What challenges do banks and companies face?
Corporate capital raising and treasury are facing major challenges with changes in means of payment. The times when customers paid with cash are still far from the end in Germany. However, more and more experts are calling for the abolition of cash and the switch to purely electronic money. For the financing of companies, innovations, interim financing and also pre-financing, this means changes in treasury. While cash can be easily calculated and counted, raising capital through digital means of payment requires completely different things, for trade and for companies. Electronic payment transactions are both advantages and disadvantages if the treasury only exists purely on paper, but is not in the cash registers as cash.
Is traditional cash really dying out? And if so, when?
Cash will, sooner or later, come to an end. In a few years, there will be no more cash in Scandinavia. Germany, where traditional cash is still the most popular means of payment, will follow a few years later, even if this is not yet foreseeable. Nevertheless, it is important for companies to think about the conversion of treasury and financing in good time, and not to think about digital means of payment and virtual currencies such as Bitcoin the day after tomorrow. The earlier we start looking into the future, the more companies will have better opportunities later on when it comes to raising capital. To wait now until the cash becomes less and less would only mean that there will be a disadvantage later. Because the competition has passed by.
The disadvantage of digital means of payment for companies
Even though the future is becoming increasingly important and an end to cash will one day be reached, the switch to purely digital means of payment has a striking disadvantage for companies. Where in the past there were cash reserves in the coffers, which could be used to finance out of their own pockets. Will this kind of reserves no longer exist one day. Especially when things get tight when it comes to raising capital from outside, and things don’t look so rosy when it comes to treasury, this could be a disadvantage for companies.
What challenges do digital means of payment and virtual currencies pose in your company? We look forward to your comments.
Image source: Fotolia.com, Photographer: kaprikfoto
