What's Really In Your Wallet

When it comes time to pay, are consumers reaching for a smartphone instead of their wallet?  

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What’s (Really) in Your Wallet?

Dec 4, 2017

What's Really In Your Wallet

When it comes time to pay, are consumers reaching for a smartphone instead of their wallet?

Yes. According to the TSYS 2016 U.S. Consumer Payment Study, credit cards and debit cards are preferred as payment options over cash and mobile payments continue to show rapid growth. The number of mobile payment users, according to the Business Insider’s Mobile Payments Report,June 2016, indicates the number of mobile payment users is projected to be 150 million by 2020, and the total dollar amount of in-store mobile payments is expected to be $503 billion by 2020.

Of the consumers polled for the TSYS payment study, 44% stated they had already loaded their card information to a mobile phone or wallet, and 42% had similarly done so with their debit card. The study did point out that although cash remains king for consumers when it comes to fast-food and coffee shop quick purchases, for everyday purchases such as gas, groceries, and discount items, or higher-end purchases such as travel, online purchases and dine-in-restaurants it’s credit cards and debit cards that are the preferred method of payment over cash. As technology increases, so will the options that consumers use to pay, including contactless payments, digital wallets and person-to-person payment networks.

Even Visa® is encouraging the “no-cash” shift, with a campaign earlier this year that offered $10,000 each to 50 small restaurants or food vendors willing to go cashless. Why would merchants want consumers to pick up their smartphone when they pick up the bill?

For retail and restaurant businesses, cashless currency offers many benefits:

Spending more without cash

Making a purchase at a place of business is no longer limited to those with cash in their wallets. And the size of the purchase isn’t limited to the amount of cash carried. Any potential customer connected to a digital payment program can make a purchase in-store or at a restaurant any time they choose. Research shows that these shoppers will spend more money, more often. Hello spontaneous shopping. 

Faster transaction time

No one enjoys waiting in line, and retailers are working hard to reduce transaction times. Faster transactions not only boost satisfaction, it allows a merchant to handle more customers. As a general rule, processing a cash transaction takes more time than a digital one. 

No cash, less theft

Retailers might discover finding employees to work the late or overnight shift a challenge. Cash in-house could make an establishment a key target for thieves. Eliminating cash- on-hand can also help reduce in-store theft. With cash at their fingertips, employees, according to the National Restaurant Association, have been known to dip into the proverbial cookie jar, with 75% of employees across all retail having admitted to stealing and costing establishments such as restaurants 7% of sales

Better customer connection

Digital payments provide digital records, and a new understanding of a customers’ shopping preferences and habits. This ability to Know Your Customer (KYC) has changed the face of marketing. Once a merchant knows who their customer is, they can market to them directly. Purchasing data indicates what, when and how consumers like to shop, allowing special offers to be tailored to their needs and preferences. And loyalty programs tied to credit cards can encourage shoppers to return more often and spend more when they do. 

Of course, nothing this beneficial comes without its challenges. There are fees for cashless transactions and hackers continue to try and exploit technology to obtain stored information. Nevertheless, the benefits of going cashless seem to outweigh the risks in the minds of consumers. For them, cash may still be king... but, probably not for long.

New to credit card processing? Contact TSYS for more information and help to get you started on your way.

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