In the modern economy, the way we pay for goods and services is just as important as what we pay for. Yet the impact of this move towards a cashless society has had significant effect on consumer behaviour.

Cash has been dethroned. The once mighty king of payment methods around the world has been usurped by direct debit options and electronic payments. A 2013 study by the Payments Council in the UK found that direct debit payments represented three quarters of a consumer’s regular payment commitments.

It’s not the only significant change. Just a few years ago with the advent of the GFC, debit cards began to hold sway over credit cards. Financial experts from NASDAQ to the Motley Fool are arguing that the death of both the credit and debit card is nigh; that this method of payment will be replaced completely by mobile technology.

Technology is already so advanced that software implanted within your mobile phone can link to your bank account. This is occurring despite the fact that most people have only just become used to tap and pay payment systems, however scepticism over this system remains. In Victoria, Paywave technology is suspected of being a major factor in up to 100 extra fraud related incidents a week. Police and banks are currently in talks about this perceived crime wave. However, according to a Herald Sun report banking sources say the sum stolen is smaller than in the days when signatures were used for card purchases. And as David Glance explained in his article about the modes of mobile and electronic payment, the advantages far outweigh the problems it may cause.

This rise in electronic payments was championed way back in 2003 in a whitepaper prepared by VISA International. The report opened, “Today, that human determination to innovate and adapt – the same spirit that once drove us to shift from using bushels of corn to sacks of gold as a form of exchange – is powering the growth of a global electronic payments network... It is a dynamic, innovative system that maximises economic growth by providing fundamental benefits such as a safe, sound, and predictable international payments network connecting buyers and sellers; ever-increasing levels of security and consumer empowerment; greater economic transparency; increased economic stimulation; and widened participation in the banking system. This network accrues benefits to economies and people around the world.”

If we ask the question: has the consumer benefited from mobile and electronic banking? The quick answer is resoundingly affirmative. The process of budgeting, paying, and saving is easier. Finances are streamlined. Access to your money is instant. With direct debit options or BPAY, you can set up your banking so you never miss paying a bill. And with mobile technology, there is no need to carry cash.

You still have to be careful with what you spend. The Guardian writer Patrick Collinson makes the very valid point that, in a cashless society people may become laissez faire with their money. He cites a report from the American Psychological Association, which draws a parallel between the pain of paying with cash and the near lack of control when paying by other means.

Collinson says, “Ultimately, cash encourages self control while other forms of payment encourage spending, often on unnecessary luxuries. Moving to a totally cashless society is therefore only likely to accelerate the vast build up in personal debt witnessed over the past four decades – unsurprisingly the same period in which cards have become ubiquitous.”

It is somewhat of a Luddite’s view, however the concerns are genuine. This cashless society has transformed consumer behaviour in both positive and negative ways. Yet the same principles of money management apply as they always did: know what you have to spend, know what you are willing to spend and budget for a rainy day. Do that, and this brave new cashless world will continue to make life easier.

This article represents the views and opions of the author and do not necessarily reflect the opinions of BPAY.

Published by BPAY Pty Ltd.  BPAY is offered by over 150 Financial Institutions. Contact your Financial Institution to see if it offers BPAY and to get the terms and conditions. This is general advice – before using BPAY please review the terms and conditions and consider whether BPAY is appropriate for your personal circumstances.

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