Digital wallets replacing real wallets as cashless culture arrives

Paying for goods using a smartphone.
Paying for goods using a smartphone. Photo credit: Getty

Losing your wallet or fishing around for the right card may soon be a thing of the past as 'tap and pay' and other contactless payment options become the norm.

A 'wallet' (or e-wallet) enables debit and credit cards (loyalty cards, tickets, etc) to be stored electronically. Using apps such as Apple Pay or Google Pay, payment can be made electronically by phone or using another device like an Apple Watch or an iPad.

Alison Morris, vice president commercial at Worldpay, says that consumers want instant gratification and using a smartphone to buy things online will soon become the norm.

"In 2017, New Zealand e-wallets made up just 19 percent of total e-commerce spend," she says.

"Elsewhere [in the world], e-wallets have grown to become the preferred ecommerce payment method, accounting for 36 percent of all transactions last year."

In China, Alipay and WeChat Pay each have over 900 million users and Morris says that people expect retailers to keep up with their fast-paced lifestyles. If a payment takes too long, they will abandon their purchase.

"As the New Zealand high street continues to integrate [payment] alternatives as a normal part of [a purchase], consumers will start to feel more comfortable with the wide array of options," she says.

Gerard Creamer, head of payments at Trade Me, says that instant payment options such as Ping make the buying process faster and easier.

"It means no more mucking around with bank accounts - we know it's a pain point for our members to have to swap bank details, enter them on the online banking and wait for the funds to clear.

"Ping removes all of this - buyers can enter their card or bank account into Ping and [use Ping] to pay directly and instantly."

Simon Kenny, head of communications at McDonald's, says that while a number of customers still use cash, alternative methods such as Paywave save time, especially in a Drive-Thru.

"We support contactless payment platforms like Apple Pay and Google Pay and [will] evaluate other [methods], particularly in restaurants that serve overseas tourists," he says.

JW Sam (Wong), founder of digital transformation company SOCOE says that businesses are actively using technology to make paper money redundant.

"Tied in with the psychology of consumerism, [the intention] is to remove the consumer from physical symbols of cash to lower purchase inhibition," Wong says.

"After connecting their credit card, [people may] lose track of the amount of purchase they make from their Apple Store or Google Store [account]."

While New Zealand could follow in the footsteps of Sweden and get closer to a cashless culture, Wong says that people will need to equip themselves.

"Similar to how candy stores don't make candy with the intention [that] people will get diabetes from excessive consumption, people need to be responsible for their actions," he says.

Ayesha Scott, senior lecturer - finance at AUT said that financial institutions and companies offering digital payment systems will require strong regulation and the onus is on consumers to keep an eye on spending and their money safe.

"Cashless technology places our spending in the 'abstract': unlike cash, we might not think about all the [small] things adding up, leading to mindless spending.

"Use confidential passwords and change them regularly, read your bank's advice on your e-wallet and never share your personal information," Scott added.

Newshub.

 

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