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The end of cash? Popularity of new payment methods soars

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16/09/2015
Consumers are increasingly using new technology such as PayPal and contactless cards to pay for goods and services, according to Gocompare.com research.

The figures show 80 per cent of UK adults with bank accounts have used an alternative payment method including Google Wallet or Apple Pay in the last 12 months.

Half have done so because they find them more convenient than cash and bank cards, while 24 per cent said they were easier to use.  A fifth plan to use new payment systems more in the future.

However, 15 per cent said they were concerned new digital payment systems encouraged them to spend more than they should, and 7 per cent don’t connect their spending in this way with ‘real money’.

Alternative payment systems

The most popular alternative payment systems used in the last year were PayPal (70 per cent), contactless debit cards (19 per cent) and contactless credit cards (11 per cent). A smaller number have used platforms such as Goggle Wallet (4 per cent), Pingit (2 per cent), Apple Pay (2 per cent) and Paym (1 per cent).

Convenience was cited as the main reason for using the new payment systems (50 per cent), while 30 per cent like to use digital wallets (such as PayPal and Google Wallet) as it made online shopping easier. A fifth said they didn’t like having to input pin numbers or card details.

Many would like alternative payment methods to become more widespread, with 36 per cent wanting to see more websites offering them. Only a minority of users thought the new digital systems were more secure than traditional payment methods (28 per cent).

Contactless payments

While 36 per cent have received a contactless payment enabled debit or credit card from their bank, only a quarter have used it to make a contactless purchase.  The survey also revealed:

  • 46 per cent areworried about fraud in connection with contactless payment systems
  • 30 per cent regularly see retailers and restaurants advertising contactless payment
  • 24 per cent find contactless payments and digital wallet payments intimidating
  • A fifth expect to make a contactless payment this year
  • 3 per cent don’t know what contactless payment is

Smartphones

The figures also suggest smartphones are changing the way people manage and spend their money:

  • 30 per cent have checked their bank balance using their smartphone
  • 28 per cent have downloaded a mobile banking app
  • 26 per cent said they were scared by the idea of using their phone to pay for things
  • 19 per cent have made a payment through a banking app on their smartphone
  • 4 per cent have made a contactless payment using their phone

“It’s clear from our research new technology is changing the way we spend and manage our money – with many people now reaching for their phones, rather than their wallets to pay for goods and services,” said Matt Sanders, Gocompare.com money spokesperson.

“Perhaps unsurprisingly, 18-24 year olds are less fazed by the new digital ways to spend money, finding them easier to use than cash or traditional bank cards.  But, worryingly, our survey suggests some of these young adults are struggling to connect their digital spending with real money.

“More than double the number of people in this age group are concerned digital payments encourage them to spend more than they should, particularly online, while 18 per cent don’t equate the money spent as real cash. While the new payment systems help remove some of the hassle of remembering PINs or re-keying in of information, they also make it quicker to spend money.  Many lose track of their spending and lots of small payments soon add-up to a sizeable bill.”

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