Contactless, Bitcoins and virtual currency? Is this virtual insanity or is the future a cashless society?
The idea of online purchasing first came about back in 1979, where the English inventor Michael Aldrich gave the concept of teleshopping. Movements and interest in this concept alongside progression in e-commerce have since caused a shift from the real time market to the digital market.
Today, the UK online shopping industry is worth around £52 bn and is set to increase to £320 bn in the next three years. Sites such as Ebay, Amazon and online supermarkets have been main contributors to this. The convenience and ability to purchase from almost any location through mobile has been a main influential factor. Digital transactions make up half of all UK online purchases, with iPhone being the most popular mobile handset used.
The older generation are becoming more susceptible to purchasing online. This is shown with an increase in online purchases from 45-69% in 55 -64 year olds between 2008 – 2015.
When you’re waiting at a busy bar or just buying a few items, contactless provides a means of efficiency in our now time conscious society, who strives for convenience. The efficiency of this payment method has definitely lead to a surge in its appeal. Research has found that consumers spend more money on smaller purchases through this type of payment which may benefit retailers. On the downside consumers may begin to lose track of their spending which they may be less inclined to do with cash. There is also the high risk of fraud due to the lack of security over the contactless payments. Users have a maximum spend of £30 per transaction and all they have to do is touch the card against the pin pad. With over 70 million of the contactless cards in circulation in the UK, card theft is on the increase. Some banks are now only distributing cards where tap and go technology comes as standard, making it difficult for those who are fraud conscious.
This viral image shows a pick pocket fraudster on the tube targeting contactless card users.
The supermarket chain CO-OP predicts that mobile contactless payments will overtake the amount of cash payments made in store. By 2025 two thirds of all transactions will be made through mobile handsets.
Apple Pay is a more secure method of contactless payment, in the sense that it requires thumb print recognition on the iPhone, iWatch to authenticate the payment.
Barclay Card now have a feature in place where you can download a virtual bank card if you lose your physical one. This feature for Android, allows consumers to make contactless payments- rivalling Apple pay.
Gaming Virtual Coins
The Gaming industry has become a great influencer for virtual money. Users purchase coins to buy special features and skip levels. The high level of traction and popularity of this has led to other entities instilling their own virtual coins. Targeting the younger generation means they are more susceptible to using similar payment methods in later life and using virtual currencies makes gamers less conscious of their spending.
This is why the Kim Kardashian mobile app was so successful. The app has earned millions of dollars by getting users to spend money on items such as Balmain and Jets to accumulate fame and become like a real life Kardashian.
Amazon introduced Amazon Coins in 2013, where users can purchase any item on the platform. Aimed to keep users on the site, Amazon coins can be seen to give users value for money by receiving more coins than the value purchased. Having been around for three years now, the on- boarding process is taking a while. Consumers probably aren’t ready for this, like in the case of Facebook who introduced FB Credits system in 2011. This was an attempt to standardise payments for the apps on the site and took 30% for doing so.
However, Amazon’s purpose of creating this currency is not currently for financial gain but to provide an app development eco system where app developers can sell apps to Kindle users.
BitCoin is a controversial peer to peer form of online currency allowing users to perform irreversible money transfers without the need of a bank or money facilitator. This is a crypto online currency that aims to replace cash. Bitcoin has no central control as it runs on a network of computers that run on the same level.
Every Bitcoin transaction is made on the block chain which is a payment system that time stamps each transaction. However, these transactions are saved as addresses, which aren’t necessarily attached to anyone’s identity, allowing the opportunity for fraud.
Recent news shows a hacker has put 117 million Linkedin details up for sale in return of 5 Bitcoins. 5 Bitcoins is set to be worth around £1,500.
Fraud and Online Security
The main reluctancy for using virtual and digital currency is the high security and data threat -fraud being the most common. Nowadays, because these behaviours are becoming part of our everyday life individuals are becoming desensitised to the dangers.
Mobile phones are becoming a hacker’s honeypot. With so much information in one location it is certainly putting people at higher risk.
Contactless on mobiles are new targets for fraudsters. They no longer need to clone cards as stolen details can be uploaded straight to Apple Pay. With Apple Pay it is down to the banks to protect details and monitor fraud, allowing for security risks.
Gamers entering their bank details onto apps and online games are risking an opportunity for hackers to obtain information and commit fraud.
Trust in banks is quite loose. Thinking back to 2008 when many ran to withdraw money from banks as the financial system was close to breaking point. If the banks were ever in any trouble you you not want the option to withdraw, which cash provides? In a cashless society every transaction will be traced. This information will be harnessed by banks and the government and will probably used as a form of surveillance- more so than ever.
Cash is the fastest and most direct form of payment especially for smaller items. It is so important for small businesses starting out and small enterprises such as markets as they rely on a cash economy to sustain themselves.
Is society leaning more towards a more convenient driven lifestyle and disregarding the risks that follow? Is it social trends lead by technology and leading phone companies that is encouraging this move? Are banks pushing society towards this future by enforcing cashless cards on society?
With current consumer habits leaning towards convenience and efficiency and technological advances growing it is likely that the future of digital currency will grow.