In E-Commerce, Small is the New Big - 'ZIFFPAGE TITLEThe Once and Future '

The Once and Future King

Are we on the cusp of a cashless society? Not by a long shot, though the use of cash is declining, accounting for 15 percent of consumer spending in 2004, compared with 18.6 percent a decade earlier. "I don't think it will ever go away completely," says Mike Friedman, director of the emerging technologies practice for Mercator Advisory Group, a Waltham, Mass., research firm that covers the payments industry. "There is a certain cachet to cash, it feels good to have a big wad of it in your wallet, and it's anonymous." Still, he says, "things are really pointing toward the microcommerce market taking off. In the next year or two we'll see substantial growth in the number of places that accept credit and debit cards."

And credit cards themselves are due for a makeover. New contactless cards, such as Chase Bank U.S.A.'s Blink program and MasterCard's PayPass, have radio-frequency chips that let customers wave their cards before readers instead of swiping them. Before long, consumers could be using chips embedded in their cell phones, wallets—even their watches—to make micropayments quick and painless at the point of sale. "We are exploring a whole host of new vehicles, including the deviation from cards entirely," says Visa USA's Manby.

Cash will always have its uses, of course. It will always be the best way to conduct private, anonymous transactions. And concerns over how credit card companies use the avalanche of personal information they collect everyday are unlikely to abate anytime soon. But if you're the trusting type, it will be hard to beat the convenience of credit, whether you're buying a new car, or just a cup of coffee.