Whether you now rely on cashless payment methods like mobile wallets to buy nearly everything, or can’t fathom the idea of using your card to buy a soda, payment innovations have influenced how we manage money. And just as ride-sharing apps and the gig economy have transformed what we collectively accept as normal when it comes to getting around town or earning a living, changes in cashless payment technology now mean some old financial beliefs no longer apply.
Are you still accepting any of these financial myths as fact?
Conversations surrounding when the U.S. would go cashless date back to the 1980’s, but some media headlines still proclaim that the end of cash is on the horizon. In fairness to those predicting that cashless payment will soon be the only way to buy, there is some evidence to support the theory. After all, the salad chain Sweet Green and Amazon Go once banned cash purchases, along with a number of small business sprinkled around the country. New findings from FIS’ 2019 Performance Against Customer Expectations (PACE) report, revealed that cash acceptance among small to midsize businesses (SMBs) dropped from 66% to 53% since 2017, and nearly 40% of SMBs surveyed now accept mobile payments.
Yet, cash bans have generated backlash. Both Sweet Green and Amazon Go now accept cash; New Jersey and Philadelphia have passed legislation that disallows cash bans at businesses. Cities like New York City, San Francisco, and Washington D.C. are considering following suit.
While an influx of self- checkout terminals and Amazon Go-like services may nudge customers to choose cashless payment out of convenience, we’re far from the days of a cashless society in the U.S. After all, Pew Research Center reveals that 52% of Americans still use cash to make at least some purchases each week—and that number that has barely changed since 2015. For consumers, the combination of cash and digital payments acceptance by merchants of all sizes is the ideal: It means more convenience, more control and more choice.
Given that one out of every three PACE respondents said they’ve been victims of fraud, it makes sense that consumers might assume cash is the only form of payment that can’t be compromised. While cash isn’t tied to your personal information like a card or bank account, it leaves you more vulnerable than you may realize.
If someone steals your cash or you lose a wallet full of it, you could file a police report—but there’s no guarantee you’ll get your money back. With a credit card, you’re not held liable for fraudulent purchases; fraud liability is limited with a debit card, too.
Plus, each time you use a cashless payment, you contribute information that is used to better protect every consumer and business from fraud. In the financial services world, these wells of information are called fraud consortiums; they’re used to help card issuers like Visa, Mastercard, American Express and Discover better identify and understand how fraud happens. Armed with this information, they continue to get better at preventing fraud and can do it without irritating the customer with declined transactions that seem suspicious, but really aren’t. In fact, any vendor in the fraud prevention business uses consortium data to better protect clients—which may span financial institutions, card issuers, fintechs—but ultimately helps you, the customer.
If you’ve ever doubted that your card information will be kept secure when you’re buying from a local merchant or “mom and pop” shop, you’ll be happy to know that mobile and digital payment technology has given small businesses affordable access to the same types of secure payment tools large retailers have long used. Plus, a set of rules known as PCI Security Standards outline a number of security measures that any business that accepts payment cards must follow. Assuming the merchant is complying with the security standards to which they’ve agreed, you can be confident that the payment you make at your local food truck is as secure as the one you make at a large grocery store chain.
Payment innovations have made it easier and more economical for SMBs to accept all forms of payment and have subtly shifted the way business owners manage their finances and how banks serve them. The financial services industry is continuously influenced by innovation and changing customer demands, so while it’s likely a whole new set of myths around payments will emerge in a few short years—these are three cashless payment misconceptions you can stop believing.