Mobile & Online Payments UX

How invisible payments, and banks not doing their job, can put us all in the red

How invisible payments, and banks not doing their job, can put us all in the red. Main photo: Pressmaster, Shutterstock.com
Written by Duena Blomstrom

We’re spending more because of contactless, but something is still missing from the experience. Duena Blomstrom explores the impact of invisible payments.

Amazon Go – be still my beating heart! I can now go in and out of a store without any of the pain of having to stand in long queues, or battle self-service machines that work as well as most airline self-check-in torture kiosks! What a wonderful concept!

Almost as soon as it was out, the Fun Police choruses could be heard around the digital world: “We’re going to spend even more!”, “Coupled with instant access to loans will spell financial disaster for consumers!” they lamented. It’s like they can’t bare us, the consumers, being happy! I want to pay quickly and painlessly! What kind of masochist wouldn’t agree with that? And surely, they must be exaggerating, what difference does it make if I use my card at the end of a long, soul-destroying line, or see my total as I exit the store?!

Thankfully, sane voices reminded everyone that it’s no different than contactless, which we’ve had around for quite some time now – and it’s working out just fine for us. Or is it?

Spectacular adoption

Contactless – what an unfortunate name, since you have to tap the card, effectively making contact! Usage reports are showing it to be an unmitigated success. According to Barclaycard, four in every 10 eligible transactions are contactless, and if we factor in how some outfits have been slow in rolling our their capabilities of accepting the payment, we can easily presume most customers who have the technical opportunity to tap to make a payment will do so.

While adoption is spectacular, we should take a closer look at the spending behaviour. Some reports suggest that once the spending limit was raised in Britain to £30, people increased their monthly spending by an estimated 20%. This comes chiefly from weekend overspend.

Imagine being at your local pub with a bunch of friends having a good ol’ time. Every time another round is ordered, the waiter brings his card reader to settle it. A fleeting beep and millisecond later, he nods, smiles and leaves. Seems you have paid by contactless. Magic. Except, the only thing you really know about the amount is that it was under £30. How much it really was is generally unclear, and while largely irrelevant if you’re having a great evening, using Chip and Pin would have allowed you that brief moment of financial responsibility while it asked you to approve the amount before entering your pin.

The UK Card Association tells us the average contactless spend is £8.80, so it’s clear they’re being used for rather large purchases and not transport, which would amount to smaller transactions. Now, evidently, in the absence of a limit of £1000, we ought to be relatively safe from instant financial ruin. However, if we look at the same stats, half of the contactless cards in the UK are credit cards, which makes the actual spend much higher.

While thanks to the (arguably) booming economy, the average UK could afford to mindlessly tap and use contactless about 22 times a week before they finished their entire disposable income, according to the Money Advice Service four in 10 adults in the UK don’t even have £500 in savings. That alone is a bleak picture of the future, even to the untrained eye.

Financial consciousness

Maybe it’s time we stop debating ‘cashless’, which is evidently the future, and start debating ‘mindless’, which is already the ‘now’. Personally, I’m a fierce personal responsibility fan, so I’m far from advocating for not having contactless payments. Far from it, in fact – I think the limit should be raised not only to match that of Australia or Canada (around £55) but to however much the user chooses, so that it breeds financial consciousness. I’m simply pointing out that as we’re optimising the ease of access, frequency of usage will increase and consumers need immediate visibility to gain control.

Maybe it’s time we stop debating 'cashless' and start debating 'mindless' Click To Tweet

Credit score agencies have been quick to point out the dangers of overspending when using contactless, but they also make it sound as if their technology is the answer to counterbalance it by information that’s deceiving. The information a consumer gets from a credit agency is post factum – the damage or overspend has already been done. Having immediate, contextual and relevant visibility of one’s finances is a must that lies with the money provider themselves: the banks.

Having immediate, contextual and relevant visibility of one’s finances is a must Click To Tweet

One could argue they ought to have first put in place the tools to keep us aware and informed of our spending habits before they moved into faster payments in an era of dangerous consumerism and lack of spending restraint.

Instant spending alerts, clear free-to-spend balances, contextual notifications relating to a customer’s money, and relevant information about spending’s effect on overall finances to aid perspective – these are all still a figment of fintech’s imagination for incumbent banks in the UK, yet customers have a way to spend even more, and faster.

Financial health isn’t the retailer’s, the credit score agency’s or even the bank’s responsibility. It is undoubtedly our own. Yet, giving us all the information to achieve it is their collective duty, and technology isn’t what’s preventing them from doing so.

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– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main photo: Pressmaster, Shutterstock.com

About the author

Duena Blomstrom

Duena Blomstrom is an independent digital banking consultant, an entrepreneur and VC, a mentor for Startupbootcamp and Techstars, an uncomfortably opinionated blogger, and a public speaker at industry events.

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