Will contactless payment systems replace cash?

Contactless payments
Will you soon be able to pay for products by waving your phone at a reader?

People hate carrying cash nowadays, and one of eight people believes that cash will become obsolete in the future, according to Barclaycard and Barclays. No one likes having a ton of spare change, or having a wallet stuffed with one dollar bills. And people feel uncomfortable and insecure when carrying large denomination bills.

According to the study, £23 is the average amount of money that can be found in a purse or wallet. Also according tot he study, many people hate carrying loose change, and the majority (57 per cent) of respondents said they refuse to carry around one and two penny coins. One fifth said they avoid carrying cash entirely.

Dan Wass, head of current accounts and contactless at Barclays, commented: “Although we are far from becoming a ‘cashless society’, it’s clear from our research that cash is no longer king.”

Credit cards are less popular these days after the credit crunch of recent years. People are also sick of the various predatory fees charged by credit card companies.

Debit cards continue to be a popular wait to pay for retail products.

Instant money transfers or so-called “contactless payments” in which a person swipes a card or device, and money is transferred instantly, could be the wave of the future.

Contactless payment systems include credit cards and debit cards, key fobs, smartcards and any other devices which use RFID for making secure payments. The embedded chip and antenna enable buyers to wave their card or fob past a reader at the point of sale. Some suppliers claim that transactions can be twice as fast as conventional cash, credit, or debit card purchases. Because no signature or PIN entry is typically required for contactless purchases under US $25 in the US and under £15 in the UK, research indicates that consumers are likely to spend more money due to the ease of the transaction. MasterCard Canada says it has seen “about 25 percent” higher spending by users of its PayPass-brand RFID credit cards.

However, research indicates that some people still refrain from making contactless payments due to fears about security and a lack of understanding about how the technology works.

Methods are being developed to protect people’s security when using contactless payments. For example, although a number of payments can be made merely by touching a device to a shop’s outlet, only a certain number of transactions can be made before a user is required to enter their pin.

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