Did you dream about cards replacing cash? You dreamed too small.

by Ron Daly

Maybe we've aimed a little low...

Granted, most of us didn't see the change coming - "Smartphone? What the heck is a smartphone?!?" we said in disbelief. Sure, we had Blackberries, but the iPhone surfaced and struck a mighty blow to the way we think about our cell phones. Maybe the phone wasn't the important part. Maybe the smart is where the new money is.

And boy, is there ever money in smartphones. Not only in the app market, mind you, but in the transfer of money between a buyer and a seller. There are mobile banking apps, of course. There are PFM apps. There's even a device from Square that allows a person to swipe a credit card on their phone. That's pretty mind-blowing. But Starbucks - that's right, Starbucks - has just invented their own way to pay for things via smartphone.

From the Transaction Directory:

"Today, one in five Starbucks transactions is made using a Starbucks Card and mobile payment will extend the way our customers experience and use their Starbucks Card," said. Brady Brewer, vice president of Starbucks Card and Brand Loyalty.

Last year, Starbucks customers loaded $1.5 billion onto their cards, a 21 percent increase from 2008.

In a related story, CNN Money reports on the growing popularity of “mobile currency,” whereby customers use their mobile phones in place of cash or credit cards.

“There’s a lot of money at stake if it’s done right,” said Omar Green, director of strategic mobile initiatives at Intuit.;

For years, we've talked as an industry and as a society about the end of cash, the next wave of finance, and what the future had in store for our money. And maybe we were dreaming small - we just figured debit use would increase and cash would start to drop off as a form of payment. We weren't counting on smartphones to be the next step. Were we?

Well, as recently as a year ago, Newsweek was predicting that the cell phone would edge its way in as a payment method, as did creditcards.com. And here we are, seeing one of America's most interesting businesses jump in and get wet.

While we are fighting the Interchange battle, who's watching this critical shift in the payment system? No more checks, no more Visa, no more MasterCard OR Interchange income...