Contactless Culture

Contactless card payments make our lives so much easier – it grants us access to transport without a fuss, affords us to ‘tap and go’ and we can sync our credit cards with our mobiles so we can carry even less. We all have busy, hectic lives with jam-packed schedules and there’s no doubt that contactless payments are simplifying things and speeding up pesky queues, but have we ever stopped to consider if this is changing our spending habits, too?

There’s no arguing that contactless payments have become popular since their introduction in 2007. It is now the most popular payment method, accounting for 42.6% of all transactions in 2017. Credit cards had been responsible for higher value transactions for years, but contactless payments now make up for those small transactions as it’s quicker to wave your phone than it is to count out your change.

Contactless Payments and How We Spend

It may come as no surprise that financial and psychological studies indicate we spend more when we utilise contactless payments. When consumers are not physically counting out their cash and handing it over, the transaction loses some of its weight or notability. This means we are more likely than ever before to over-spend or over indulge on small purchases, without even realising. We don’t open our wallets and see a lack of cash anymore, so we are less likely to realise we are running out of funds.

Due to the £30 limit on contactless payments, it’s the little things we now seem to be over spending on. Barclaycard data shows that supermarkets are the primary beneficiaries of contactless spending, as a third of all transactions use this convenient payment method and now average £23 per shop. It would seem wandering around a shop without being conscious of how much cash we have in our pocket, and therefore how much we ought to be spending, has seen 59% of Brits overspend. Overspending little and often could be damaging your financial security by eating into a safety net of savings to fall back on in a financial emergency. This can result in many turning to other forms of credit to cope with an unexpected bill, including  a short term loan.

Contactless cards have fuelled our need for efficiency. Consumers are now unlikely to wait for a receipt which is just another way we keep track of all our spending. Whilst this might be good for the environment, it could be bag for keeping track of our outgoings. Many organisations, including are championing digital receipts, as they are more efficient and a more reliable medium for keeping track of payments, outgoings and returns. Similarly, delays in processing contactless payments can make us feel like we have more money available than we actually do. As the physical transaction of waving a piece of plastic, contactless users are likely to spend all over again.

Pros and Cons of Being Contactless

We love contactless simply because it’s more efficient and cleaner to use. We can travel with less in our pockets and feel more carefree. As above, this could be dangerous for our spending habits, but the immediate satisfaction of contactless payments is quite obvious, wherein we have our new purchase without experiencing the cost of it.

There are other benefits, though. It could be cheaper to use your contactless credit or debit card for some purchases. For example, commuters and travellers will be charged when they exceed a daily limit with their Oyster card. Contactless credit card users can set their limit and are less likely to be penalised, resulting in lower fares

Reports and card-issuers state that contactless cards are safer from fraud. As we rely less and less on cash, we can quickly report a stolen or lost bank card but once cash is lost, there’s rarely any chance to get it back.

For businesses, tap & go payments mean they are able to improve their customer experience. Popular bars and restaurants can clear their queue quicker, there’s less time waiting in line at the local newsagent when you’ve only popped in for a paper and it can be so much easier to tap your card to get on a bus than to stand and count out your coins. This improves customer satisfaction and even provides customer peace of mind when they are shopping in remote places, for example, contactless payments are now commonplace at festivals and events.

As contactless payment technology continues to improve, and we leave our full, bulky wallet behind more and more, we often forget our loyalty cards. Large businesses are starting to bridge this gap and are supplying their loyal customers with the technology to maintain their rewards. Starbucks for example, have turned their loyalty scheme digital so you can collect your points on the mobile contactless app, neatly stowed in your phone wallet. If this trend were to continue, this could lead to better and more convenient savings on small, regular purchases, like your morning cup of coffee. Contactless coffee payments might even be helping the fight on sustainability as costa coffee customers can now use their reusable cup to pay for their morning caffeine injection. This suggests where else we might soon find contactless payment integration. We already wear our contactless devices with our smart watches, but Which suggests this could advance to rings, bracelets and other everyday items.

We’ve already established that contactless payments are encouraging us to spend. Although, this seems to be more of a consumer issue wherein it’s increasingly easy to lose track of our spending, another thing to consider is that contactless payments add to our data profile. This can be both good and bad, but this information continues to track what we buy and can be traded and bought. In fact, in 2017 data overtook oil as the most valuable commodity on earth. This does mean that consumers are more accurately targeted by marketing companies and could suggest an increase in impulse-buying or unnecessary purchases because we are bombarded with more-accurate advertisements. Many could find themselves in financial emergencies as a result of not keeping track of their contactless payments and mobile impulse buying.

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