As technology becomes more and more advanced, it slowly changes our way of doing things. We replace Television with Netflix, taxi with Uber, brick, and mortar retail stores with eCommerce sites, and soon enough, we’re going to replace cash with digital payment.
Sure, the older generations have voted to ban the implementation of a cashless society, and several states have already granted it. But half a century from now, when Gen Z has become the dominant force, a cashless society will eventually become inevitable.
While the implementation of card payments, such as debit cards, credit cards, or transit cards have been around for a while, the emergence of Apple Pay, Google Wallet, Android Pay, Amazon Go, and facial recognition payments in China have recently created a new system, contactless payments.
Some banks and retailers call this system “Tap-and-Go”. In this new system, customers no longer need to bring their wallets, cards, cash, or any physical payment tool. They only need their smartphone or face (in China) to buy almost anything.
But, just like any other thing, the contactless payment system has its own benefits and drawbacks. Let’s take a look at the positive sides first.
Benefits of Contactless Payment
- More convenience for the customers
As mentioned before, the contactless payment system enables customers to pay with their smartphone and face. It means that they no longer have to go through the hassle of fumbling through their wallet looking for cash.
- No more queueing
Popular retail stores and restaurants usually have a long queue of people trying to pay. It happens because there are only a few cashiers that have to deal with tons of people. Not to mention the time spent to count the cash and look for the change.
Contactless payment shortens the time spent between customers because people just need to tap their phones and go. As a result, customers no longer need to get stuck in a long queue.
- Lower crime rates
Drug traffickers pay for the drugs with a briefcase full of cash, not via transfer. This is done so they won’t leave any digital trails. Now imagine a cashless society where cash no longer exists. Can they still pull it off without being traced by the police?
Sure, they could work on new strategies and ways, but they won’t have the same freedom as they once had. In other words, contactless payment has the potential to lower crime rates.
- Much easier to exchange currency
Imagine being someone that has to travel between countries a lot. Each time you visit another country, you have to go to the local bank to exchange your currency. Doing it once maybe tolerable, but doing it over and over again will take a toll on you.
Luckily, the cashless payment system allows you to exchange currency digitally, saving you the time and effort to go to the bank and wait in line.
- More rewards and discounts from brands
A lot of brands create their own payment cards as a part of their loyalty programs. Take the Starbucks card as an example. Every customer who spends $1 on Starbucks using the card will gain 2 points. After a certain amount of points, Starbucks will reward customer discounts or even free beverages.
Drawbacks of Contactless Payment
There are always two sides to a coin. For every benefit, there’s also a drawback. Here are some of the disadvantages of contactless payment:
- Difficult for older people to understand
Our parents and grandparents grew up in an era without the internet and smartphones. So, it’s understandable if the concept of cashless payment doesn’t make any sense to them. Sure, some of them are open-minded enough to learn, but the majority isn’t.
- Some people don’t even have a bank account
As many as 1.7 billion adults worldwide don’t have access to a bank account (Forbes). A number of factors could play into this shocking truth:
- Some of the older generations might be used to keep their money beneath their pillow rather than a bank.
- A lot of homeless people may don’t have the required balance to create an account.
- Don’t forget about those people that live in rural areas with no bank nearby.
Pushing the implementation of a cashless society will definitely create social injustice for these people.
- Prone to cause overspending
When you have cash in your hand, you can calculate how much your expense is. That’s not the case with cashless payments. Because it’s so easy and convenient to use, people often lost track of their expenses and end up overspending their money.
According to MIT, people spend up to 83% more money when paying with credit cards compared to paying with cash. To avoid overspending, you can use prepaid cards or set up spending notifications to keep yourself on track.
- Exposed personal data
Using a contactless payment system will surely expose your personal data to the banks and service providers. They’ll find out how much money you make in a month, your monthly expenses, things you like to buy, and your overall spending habits.
Not to mention the risk of someone finding out or hacking the password of your digital wallet. When that happens, all of your money will be gone in a heartbeat. A couple of tips to protect yourself from hackers:
- If you have an iPhone and it goes missing, wipe all of your data using the “Find my iPhone” feature.
- If you use Android Pay, then good for you because it’s actually pretty safe. Android Pay never transmits your actual credit or debit card number. Instead, they use a virtual account to represent your financial information.
- Technology isn’t perfect
Nothing in this world is perfect, not even technology. Even if it works 99% of the time, there will always be that 1% chance of lag, glitch, and system error. In a cashless society, that’s significant. It means that people can’t pay and merchants can’t receive payment. In other words, it will shut down the economy.
To understand better what contactless payment is, check out this well-crafted infographic about contactless payment by Milkwhale.