Plastic Card or Cash?

This is Information Age and there is a Digital Revolution. Many countries want to be smart and to follow the wagon.  They want to have a cashless society as they see that this is the future.

In India, as reported by Gulf News, 87 payment apps face an uphill battle to turn the country cashless. The key fin-tech players race against China in squeezing the use of cash. "China has two (2) home-grown technology giants that dominate the market."

Lifted from the same news online, India allows small and big players to take a part in the level playing field, with its multi-player or open platform business model.  There is the three-year old Unified Payments Interface that serves a single infrastructure linking all the country's banks to process digital payments in the shortest time possible and at affordable charges. It is managed by the National Payment Corporation of India (NPCI), the overall institution for all retail payment systems in the country, that serves to consolidate and integrate multiple systems into a standard platform.

Consumers prefer to use plastic cards for some reasons. It is safe to use credit or debit card as cash can be stolen. Tracking expenses is easier as purchases are reflected in the statements. Banks and merchants offer perks, rewards, incentives or value-added service (one-item-fits-all or customized).

In the small stores in our place, we see a common signboard, "Credit is good but we need cash." But these days, many merchants will persuade the buyers to use their credit or debit cards. It is one way of customer acquisition as they can store their data. These are useful for both merchants and banks to know the customers' needs better and to offer their products and/services based on their buying behavior. The information gathered also help them do marketing research. Sometimes the customers receive emails to answer survey forms.

For online businesses, they have successful payment transactions processed even if the products displayed on their portals are mere pictures and they buy the actual products later for delivery to online buyers.

For banks, they earn interest for customers' purchases using credit cards, and processing fees for both credit and debit card payment transactions.

Those who strongly push the use of plastic cards and other digital payments face some common challenges. One of them is the people's lack of awareness as to the benefits of using such according to digital payment advocates' perspective. Another is the high cost of the installation and maintenance of a secured payment gateway to facilitate digital transactions.

There must be an easier way for consumers to have at least a debit card with zero maintaining balance, like the bus card that can be bought with credits load and can be reloaded later. The internet infrastructures must be improved so they can penetrate more areas and improve the connection technology. The quality of machines, computers/laptops, gadgets including mobile phones, etc. are low which makes them vulnerable to viruses so they must invite more vendors to offer better items that meet industry standards.

It is interesting to note that some digital payment advocates do something in their objective to beat the challenges they face. In India, they came up with the open architecture system called Unified Payment Interface (UPI). It considered to be the most revolutionary development in the global payment landscape. Even with a very basic mobile phone, they can process the digital payments on three options --

• peer-to-peer
• person-to-merchant
• business-to-business

Another solution they came up with was to process digital payments without an internet connection and a basic mobile phone only can serve the purpose.

But why is it that many people still want to use cash?

Many people are still unbanked -- this is a fact. In the Philippines, according to Heritage.org, "only about 39 percent of adult Filipinos have access to an account with a formal banking institution".

We know for a fact that not all who have bank accounts can be approved for credit cards. If they have the debit cards, they do not have sufficient funds to do plastic card payment, as instead of loading if when it runs zero, they would rather use cash than go to bank or loading centers.

For those who have funded debit cards or credit cards, they prefer to pay cash primarily because of security reason. The trust element is important. There are many cases when credit or debit cards are compromised. We read many stories about a waiter in the restaurant and a gasoline boy, etc. who have the screenshots of the front and back sides of their customer's credit or debit cards which they used.

One thing to do to secure your card is to cover the CSC (card security code) or CVV (card verification value) seen at the right of the signature strip, with a liquid eraser or nail polish and put a sticker on.

There are those hackers who can dig deeper by knowing only the name, email address and telephone number of target plastic cardholders because those data are important in verification. They send messages or text or make calls. When the cardholder is not careful and alert, he wakes up one day with many debts for expenses he did not incur or all his bank balance is siphoned. The public is always reminded about this by the government authorities and banks as well.

Just remember that your bank will not use mobile phone numbers when they call you as they have the landline numbers. Also, they will not email you using a free web-based email address. They will not ask for your CSC or CVV or whatever security code.

Never, never give your personal information to other people. Your desktop, laptop and gadgets must be set with screen lock/secured with a password so if you lose them those bad people cannot have access to your important data, that are linked to your credit or debit card, and bank/s. Have your phone simcard locked.

Another reason many people do not use plastic cards is that they have the awareness that they have the money handling disorder problem and they know that they get out of control in spending when they have credit cards on hand. With many uncertain things happening, they do not want to take the risks and experience the ordeals of those who are chased and harassed by collectors if something goes wrong, which may lead to depression, illness, many miseries and sometimes suicide.

In a hypermaterialistic world where consumers are bombarded with advertisements showing call-to-action images and/or words, many consumers are tempted to go buy, buy, and buy until they drop. They go malling and go walk home with many shopping bags and maxed-out credit cards.

At a deeper view, those who spend a lot with future money do so due to stress caused by their personal or career problems can be one of the reasons for that. It is a temporary stress reliever. Buying things with future money means for them living a dream or fantasy of having those things or acquiring experiences (say, travel/tours) at the moment. There is a money handling disorder and must be addressed to.

Privacy is another reason why many consumers with plastic cards do not go for digital payments in all their purchases. They feel that they let go a part of themselves by sharing their information using their plastic cards, like onions with many layers being stripped off. They want to be out of the target prey zone to be contacted via calls and emails by different merchants. They also have fears that their data will be shared with or sold to other person or entities. Again, the trust issue is here.

But whether we like it or not, fin-tech startups are mushrooming. The big opportunity is there as billions of people globally are unbanked and have no access to various financial services. Bill Gates said,

Digital technology provides a low-cost way for people in developing countries to send money to each other, buy and sell goods, borrow and save as long as the financial-regulation environment is supportive.

Kevin Grieve, head of payments for Accenture North America, thinks that "across the globe, it's almost a country-by-country evolution".

It will take time for any country to move toward that direction -- cashless.  Meanwhile, let us also evolve and learn more about digital payment options. Do not forget to passionately make it a point to know more about related risks and security measures.

---

Photo credits: Pixabay