As the economy gradually recovers amid the easing of community quarantines, contactless transactions continue to rise in importance. And with both businesses and consumers resorting to online processes, it’s good to know the pros and cons of cashless payments.
The convenience of being able to make purchases and pay bills through internet banking, e-wallets, and other non-bank payment options is truly remarkable, and yet, according to the Bangko Sentral ng Pilipinas, 99 percent of Filipinos still prefer cash as mode of payment. So what could be holding us back?
Pros of cashless payments
What are the advantages of digital payments? Let’s go through them:
1. Allows you to save time on your transactions
Cashless payments make transactions faster. There’s no need to wait for your change if you have to pay for the wholesale of products. You also don’t have to endure the long queues to settle an urgent electric bill in a crowded payment center. You cut every transaction short by just swiping or tapping your card.
With more users going online, expect queues at branches and stores to decline.
2. Minimal or zero fees for withdrawal and currency exchange
Cashless payments also save you a great deal. Most of the banks let you make digital payments or fund transfer through PESONet for free.. And while overseas payments still incur additional fees, they’re not as high as the charges from the airport currency exchange.
Likewise, other businesses set up a minimum limit for spending on contactless payments and corresponding service charges. The amount, however, is lower than the exchange of physical currency or the use of an ATM card.
3. 24/7 access to your account
With the use of apps and websites, you get to keep track of your spending. This isn’t always the case for cash transactions. Visiting the bank or checking your card balances often can take a lot of effort.
By using contactless payment, you create an account that gets updated real-time. These digital platforms have features for viewing the transaction history, checking your statements, and notifications for any activity you made in the account. You can also access them anywhere and anytime you want.
4. Ensures security and accountability
Since virtual payment options records all your transactions, it also serves as an extra layer of security from the discrepancies that can take place in your account. You can seek customer support in cases of refunds, transaction errors, and other payment disputes.
In the event of theft or fraud, it’s likely that the cultprit will leave a trace in your records. You can easily check details such as the location and the establishment where the transaction happened.
5. No bulky wallets or purses
Bringing cash when you travel for dinner, shopping, or vacation can be troublesome. There’s so much to think about especially within areas that are too busy and crowded. Worse, there is no way to know where or how the culprit is spending your hard-earned cash.
With a digital app containing your payment, there are only a few worries about traveling around with your money.
Cons of cashless payments
The pros and cons of contactless transactions somehow outweigh each other—but we’ll let you be the judge of that. These are disadvantages you may encounter when paying virtually:
1. Prone to overspending
Going cashless doesn’t totally eliminate the impulsive buying. If your digital account is mishandled, it will only mirror those huge and various purchases you made with having cash. As mentioned, digital payment gives you easy access to your balances. This means that your funds can readily be used for transactions.
2. Payment may not reflect instantly
Transactions often happen too fast. In just a minute, you can check out on that new item on your cart or pay your bills from your home. However, some payments have to go through processes within a few business days. It may be surprising to find some changes in your statement after a purchase you forgot you’ve made several days ago.
3. System errors
Contactless payment is a streamlined option for making purchase transactions. However, like humans, technology is also prone to errors. System glitch, buttons that don’t work, missing details—all these can be frustrating to you. Digital processes are supposed to bring convenience.
The bright side: Malfunctions occur rarely. A cashless device or platform may not work suddenly because of either a system error is present or something is wrong with your account (insufficient funds, incorrect details).
4. Still subjected to theft
Pickpockets can steal cash easier, but it doesn’t mean that your card or phone cannot be stolen. If you don’t adhere to the security measures for contactless payments such as strong passwords or authentication, thieves can make use of your device for multiple activities. They can empty your funds without your knowledge, especially that thieves nowadays also upskilled for scamming and phishing.
Effects of virtual transactions on the economy
Other than the pros and cons of cashless payments, the concept of a cashless society offers a glimpse of the future. The COVID-19 pandemic that made nations suffer emphasizes the importance of this transition. What do you think will be the long-term impact of a contactless economy?
- Generates bigger seigniorage (profit from printing or minting of money)
- Less circulation of banknotes
- More accurate and faster disbursement of proceeds
- Tax avoidance may be reduced through accountability
So if you haven’t, it’s about time you got yourself acquainted with cashless payments. But while it definitely offers more benefits than cash, ultimately your financial status will depend on your self-discipline.