The way we pay for the things we buy is constantly evolving. It wasn’t that long ago that cash transactions were the most common form of payment. Then credit and debit cards took over. In 2020, thanks to technological advances and the COVID-19 pandemic, yet another shift has occurred.
A recent article in Payments Journal outlined the evolution of payment methods. It delved into several important points that are likely to impact the way you and your family pay for everything from groceries to services. Here are the key things we think you should know.
Cash Payments Have Declined
The use of cash as a payment method was already on the decline before the COVID-19 pandemic. Carrying cash can be risky and inconvenient, necessitating a trip to the bank or ATM to get what you need.
Most importantly in light of our current situation is the issue of contamination. Cash is not sanitary because it changes hands frequently. It can absorb sweat and other fluids and may be a vector for germs and diseases.
The increasing preference is for contactless payments. Even those who used to prefer cash have come around to understanding the risks of using it.
Credit and Debit Card Usage is Declining Too
While there is an argument to be made that credit and debit cards are less risky than cash, they still leave us at risk, both in terms of disease transmission and fraud.
Using a credit or debit card in a store requires you to choose a payment method from a terminal. If you use a debit card, you will need to enter your PIN. With a credit card, you will need to pick up a stylus or use your finger to sign your name. Each of these “touches” increases the risk of disease transmission. Even stores that clean and sanitize regularly aren’t doing so after every customer.
The risk of theft and fraud is there, too. Large retailers such as Target and financial institutions such as Capital One have experienced massive breaches that have put millions of cardholders’ personal information at risk. Any time you use a card at a point of sale, you are at some risk of having your data stolen.
Mobile Payments Are Increasing in Popularity
Mobile payment methods, including mobile wallets, have become increasingly popular in recent years. They offer a convenient and secure way to pay. Because they create a unique, encrypted code for every transaction, they are far less vulnerable to theft and fraud than credit and debit cards. That would make them a good choice even if we weren’t in a global pandemic.
The other big benefit of mobile wallets is that they offer a contactless means of payment. You can simply tap or scan your phone at the point of sale. There’s no need to touch a credit card port, keypad or stylus. The entire transaction can be completed in a matter of seconds without you having touched anything other than your phone.
Just how popular are mobile wallets? According to a Research & Markets reports from earlier in 2020, nearly one third of all Americans have used a mobile payment method for the first time since the beginning of the COVID-19 pandemic. In fact, contactless payments are expected to increase eight-fold between now and 2024.
The popularity of mobile wallets is due largely to the sheer size of Generation Z. They make up 24% of the global workforce and are mobile natives, meaning that they were born into a world where mobile phones existed. They want both convenience and security when they use their credit cards. Mobile wallets offer the best of both. There’s no need to remember a credit card if you have your phone. And the point-of-sale encryption means that people can feel safe using their mobile wallets anywhere in the world.
Should You Use a Mobile Wallet?
If you don’t already have a mobile wallet, is it time to get one? As far as we’re concerned the answer is yes.
Mobile wallets offer far more security than making a payment using your card at a point of sale. The encryption that mobile wallets use means that it is virtually impossible for anybody to steal or access your credit card information when you pay for goods or services.
Most of us are in the habit of bringing our phones with us wherever we go. When you use a mobile wallet, you will have access to your credit cards too. That makes mobile wallets convenient to use. While you still might run into problems if you lose your phone, you won’t need to worry about carrying a credit or debit card with you when you go out.
As we mentioned above, the other significant safety benefit of mobile wallets is that they offer a contactless payment method that anybody with a cell phone can use. Instead of putting your health at risk by using dirty keypads, styluses and pens, you can complete your transaction without touching anything other than your phone.
The best news of all is that mobile wallets are free and available on any mobile device. Some of the most popular mobile wallets are:
- Apple Pay
- Google Pay
- Samsung Pay
Some financial institutions offer their own mobile wallets or include links to download the wallets listed above directly from their websites.
A mobile wallet takes only a few minutes to set up. It is worth noting that not all retailers are set up to accept mobile payments now. However, as of 2018, 71% of retailers accepted mobile payments. Some stores even offer store-branded mobile payment options, which some consumers prefer. Think of them as the mobile version of a store credit card.
The main takeaway from this article is that mobile wallets and contactless payments have taken hold and their use will continue to grow going forward. They offer more security and more safety than other payment methods and that makes them the ideal way to pay for purchases during the COVID-19 pandemic and beyond.
