How Americans are Getting Ready for Payment Methods of the Future
It wasn’t too long ago that cash and checks were used daily to pay for things like groceries and new clothing. People carried around thick wallets filled with paper bills and coins. And while this practice is far from dead, it has become less common as technology continues advancing the payments industry.
A survey by US Bank found that consumers carry cash less than half of the time. When they do carry cash, 76% of people keep less than $50 in their wallet at once. A whopping 47% of surveyed consumers prefer to pay via digital app, as opposed to using cash. (Note: This statistic skews toward younger generations that grew up with the internet.)
The nearly universal adoption of smartphones has led to the emergence of peer-to-peer payment apps like Venmo and digital wallets like PayPal. These apps make it simple to send money to friends or make retail purchases with just a few clicks.
A Digital World Requires New Payment Technology
Today’s young adults grew up with a heavy technological presence, shaping their buying habits. This reliance on e-commerce and the immediacy of the internet has led to a host of new payment methods that are gaining popularity over cash. In fact, most Americans believe that digital payments will surpass traditional payment methods in the near future.
Consumers want faster, more convenient ways to pay — without giving up security. In line with those expectations, many new payment methods have been developed over the past decade or so.
- Mobile Point of Sale (POS) Options: Over $4 billion worth of purchases are currently made from mobile phones each year, a number that is predicted to grow. This trend caused mobile POS options to boom, including near field communication (NFC) and in-store payment apps. These options make it easy to pay using a smartphone, often by swiping a barcode or QR code on a smartphone screen in front of a scanner.
- Digital Wallets: Storing funds in a digital account allows consumers to make purchases and transfer money to friends. It’s a quick, easy payment option that’s been growing in popularity.
- Social Media Payments: Some social networks are beginning to offer payment options, like transferring money to another user or paying within the app. Five out of six millennials connect to companies through social media, which makes paying through these networks a logical next step.
- Biometrics: You might already use your thumb to unlock your smartphone. Facial recognition and other biometrics — like fingerprinting and iris scanning — are being developed as security of the future. These techniques could soon be used to authorize payments on devices and even in stores.
Where Does Cash Fit In?
It’s clear that digital methods of payments are on the rise, with new options being developed each year. Yet, plenty of people still use cash around the world. The demand for banknotes and coins remains strong in most countries.
It isn’t such a surprise either. Cash doesn’t require a bank or mobile device, and can be stashed away for use during an emergency.
Odilon Almeida, president of Western Union’s global money transfer division, believes that cash will remain a common form of payment for the next 50 years. Meanwhile, digital payments will continue to gain in popularity.
While cash remains a contender, checks are going extinct. Checks made up 60% of non-cash payments in America in 2000, and dropped to only 13% by 2015. Most Americans believe that checks will be a thing of the past within the next 20 years.
What Does This Mean For You?
Your checkbook might be in a drawer collecting dust, but you can expect cash to remain an important asset for a while. However, it’s a good idea to open yourself up to the idea of new payment methods like the ones mentioned above. More and more companies are likely to accept payment through apps and digital wallets in the near future, and you should be ready to embrace these developing technologies.