February 10, 2023•
5 min read
Debit and credit cards and digital currencies have become part of our lives. We are used to fast transactions. At least they are very convenient! Of course, the financial market is built on paying with cash, but the principle “Take now, pay later” cannot be ignored in the 21st century.
With the development of technology and non-cash payment solutions, hard money is rapidly becoming a thing of the past. People are increasingly opting for mobile payment services not only because they are easy to use, but also because of their security. What other reasons forced humanity to switch to online payments?
Consumer behavior has also been seriously affected by the COVID-19 pandemic. According to the statistics for Europe, 74% of purchases were paid using non-cash methods in 2017. Between 2017 and 2021, the UK took ¼ of physical ATMs out of service as they were useless. Northern Ireland underwent the least change, having lost only 13% of the total number of ATMs, although 21% of them were free of charge. Access to paying in cash is becoming increasingly difficult. Not many people can still find advantages of cash payments. The question, “Can I pay with cash anywhere in the UK?” becomes more relevant.
People aged 55 and over feel most uncomfortable about ATM closures. One person in three believes that they will not be able to completely switch to cashless payments and stop paying by cash.
First, you do not have to take a big wallet with you. You just need to bring a smartphone, tablet or smart watch to the payment terminal, and you are done! It doesn't even matter what exactly you buy: some carrots at the grocery store or a brand new electric car at the car dealership.
Second, mobile apps give additional benefits: all kinds of bonuses, discounts, and a single window system.
Third, it is obviously safer to keep your savings online or on bank cards. For example, if your card is lost or stolen, you can quickly block it and cancel all transactions. Can you pull this off with banknotes? No, you can’t. Furthermore, many mobile apps use additional security measures to protect data, such as two-factor or multi-factor authentication and encryption. However, although this gives us hope that scammers will not lay their hands on our money, it is still worth being careful and protecting your account with a strong password
One of the main benefits of mobile apps is the opportunity to monitor and manage transactions through notifications. This allows you to better control your expenses and save money. Other important things are the possibility to block or cancel transactions if necessary and multi-currency payments. There is no need to go to an exchange office: all processes take place in a second, right at the moment of payment. Overall, the responsible use of debit cards can be a better alternative to physical money.
Of course, we cannot get rid of cash forever, but the last decade has made it clear that financial mobile apps are perfect for making everyday payments.
Despite all the indisputable advantages of plastic cards and online payments, their use is not as seamless as it might seem. The major drawback of credit and debit cards is overspending. They inspire us to spend unlimited sums by providing easy access to money. This is especially noticeable when we do the shopping and simply do not see how the money leaves the wallet. Both stores and cashless payments encourage impulse buying.
This was confirmed by a recent MIT survey. According to it, we are ready to spend 100% more when we make purchases with plastic cards, than with cash. A similar trend is observed at the restaurants. On average, people give 5% more tips when they use online banking services.
This problem can be overcome only by carrying banknotes in your pocket, but is it really possible nowadays?
The demand for cash payments also grows during severe crises since they turn out to be more reliable than cashless payments in some situations.
If you look for something prompt and easy to get, of course, credit cards will be the first choice. There is no need to work overtime or take on more responsibility. Do you want to make an expensive purchase right now? No problem! Just tap your credit card over the payment terminal and top it up when you can: buy now, pay later. However, it is this seemingly simple way to get money that makes users experience financial hardship due to the heavy burden of credit card debts. According to the Federal Reserve System (FRS), the average interest rate on loans was about 15% last year. If you save up for a desired purchase and pay in cash without using the credit card, you can buy goods much cheaper due to savings on interest rates.
The use of credit cards involves certain risks. If you are sure that you can repay a debt on time and in full, you will have no problems.
According to experts, debit cards are the best alternative to paper money. All you have to do is to top up your account on time. There are no debts, interest rates or overpayments. This payment method remains convenient unless you start spending recklessly or withdrawing cash from ATMs with high withdrawal fees too frequently.
The tangible drawback of both debit and cards is the effect of unlimited access to money. If you do not check your account balance in time, you risk running out of money. Using cash, you can take a certain amount with you that you would like to spend, so you have the chance to stop buying in time and stick to your budget.
The latest technology trends impose new conditions on us and pose new challenges. However, despite the rapid digitalization, many people continue to combine cash, credit cards and debit cards. Each payment method has its own advantages and disadvantages so it is difficult to opt for one of them.
Hard money allows us to make savings and avoid impulse buying. However, lately we have seen a significant reduction in the number of ATMs around the world. By refusing to use emerging payment methods, we run the risk of being left without the essential goods and services.
Credit cards make it possible to buy everything you need right away, without long waiting times. At the same time, they increase the chances of drowning in debt or making too expensive purchases.
Debit cards eliminate the need to carry a wallet and count banknotes. However, this is what creates the illusion of unlimited access to money and makes us spend more every day.
Things that remain important regardless of fashion and financial transformations are savings, accounting and convenience. If you learn how to properly manage the advantages and disadvantages of different payment methods, this will have a positive impact on your financial well-being very soon