It’s 2024: Guess What’s Not in Your Wallet?
Last year, one in three victims who had their financial accounts hacked experienced identify fraud, according to a recent study from the National Consumer League.
Data breaches have become so prevalent that they&apos;ve grown to be part of the public consciousness, and they haven&apos;t shifted our purchasing methods: Americans continue to whip out plastic 66% of the time we make a purchase.
The convenience and habit of credit cards outweigh the potential risk of having your identity stolen or bank account sucked dry. In addition, Javelin senior analyst Nick Holland points out that “consumers have a short memory, [and are also] well-protected by their credit card companies” in terms of limiting their liability for unauthorized purchases.
Holland explains that even though we reacted with "shock and horror" following the massive Target (NYSE:TGT) data breach at the end of 2013, there is an upside: The incident forced the public and the government to finally address the vulnerabilities of our current system.
Having to sign a receipt for a purchase will eventually go the way of transistor radios and flip phones. You know those electronic signature pads at many checkouts? In Holland’s words, signing one is “like a drunk writing on an Etch-a-Sketch.” Not only does it not remotely resemble your actual handwriting, it’s barely legible. (When is the last time the clerk even bothered to compare it to the signature on the back of your credit card?) Using your fingerprint would be a lot safer. The folks at Apple have already anticipated this and have added a fingerprint scanner to new iPhones. Your voice might also be used to authenticate your purchase down the road.
Five years from now, the study forecasts all types of electronic payments to increase as cash purchases fall to 17% and checks to 5%.
From the consumer’s perspective, consider the everyday example of putting gas in your car. If you’re paying by cash, you fill your tank, walk into the store, stand in line to pay and wait for the cashier to make change. Compare this to driving up to the pump, swiping your credit card and immediately driving away after you fill up.
There’s also the “up-spend” factor: If you’re using plastic, your spending is not limited by the amount of cash in your wallet.
Holland adds that electronic transactions are “an international leveler.” If you have a credit card, travel outside the U.S. no longer requires you to bring a wad of foreign currency or travelers checks. Likewise, foreign visitors to this country can swipe their American Express card and pay it off in their country&apos;s currency when they get home.
The growth in electronic transactions is not just coming from increased use of credit, debit or gift cards. According to Holland, there has also been “a broadening of electronic products” beyond those that typically come to mind. For instance, he says branded pre-paid cards from MasterCard and Visa are bringing the advantages of electronic transactions “to people who would typically not qualify for a checking account....These are really sophisticated products."
Look at it this way: Your mobile phone already provides you with special offers, coupons and purchasing incentives that you don’t get with cash or checks. These types of value-added services increase loyalty and sales- two things highly desired by retailers.
1. Electronic transactions also reduce employee theft and get the revenue into the business’ bank account faster. Plus, there’s no need to make a trip to the bank. Self-service electronic transactions further reduce the amount of staff needed.