Mark Bridge writes:

Cash is still king… but its days are numbered. That’s the message from a new report published this week by the Payments Council.

The Payments Council, which is a group of financial institutions that sets strategy for UK payments, has released ‘The Way We Pay 2010’. (Here’s the pdf document). It shows how the last decade has seen a fall in the percentage of transactions using cash, from 73% in 1999 to 59% in 2009. In just five years time, cash transactions are expected to represent less than 50% – and a further fall to 45% is expected by 2019. Meanwhile, debit card spending in the UK rose from £65 billion in 1999 to £264bn in 2009.

“But what about mobile payments?”, you ask.

From the look of the report, not much. There’s a note that the decline of cash payments “may even accelerate as mobile payments come in” and a reference to an iPhone app that “already makes this possible” – PayPal Bump, perhaps?

We’re also told that contactless payments could well be the norm by 2050, but the technology is unlikely to be on a plastic card and “could very well be on a mobile phone”. No more than a ‘perhaps’, that’s all.

Now, in defence of the Payments Council, the focus of the report is describing what’s happened – not predicting the future. And, with the exception of trial schemes and small-scale applications, there doesn’t appear to be much happening with mobile payments in the UK.

Mobile ticketing and mobile banking are different stories. But payments are still a problem for everyone, with retailers needing a good reason to invest in new point-of-sale devices, security concerns to worry consumers… and a lack of payment-enabled mobile equipment on the market.

At Mobile World Congress, James Rosewell wrote “For NFC to be successful, the top selling mobile phones will need to include NFC as standard. It’s clear the general public are not going to purchase a mobile because it supports NFC. [Manufacturers] are unlikely to increase the price of their top-selling handsets to include NFC without a compelling business case. Such a business case appears a long way away.”

Mary-Carol Harris of Visa also didn’t anticipate the appearance of a mobile wallet in the short term when we spoke to her in February.

However, there is a potential game-changing device on the horizon. The latest rumours about the next iPhone suggest that mobile payments (enabled by Near Field Communications) may not be so far off. Apple has applied for several NFC-related patents, from purchases and person-to-person transfers to a wireless ticket system. The big question now is whether the technology will be locked-down for Apple services only... or whether financial institutions will be able to take advantage of it. After all, it’s unlikely that Apple also wants to become a bank. Or is it?