Amazon Go and Contactless – How invisible payments and banks not doing their job can put us all in the red

AmazonGo – be still my beating heart! I can now go in and out of a store without any of the pain of having to stand in long queues or battle self-service machines that work as well as most airline self-check-in torture kiosks! What a wonderful concept!

Almost as soon as it was out, the Fun Police choruses could be heard around the digital world. “We’re going to spend even more!”, “Coupled with instant access to loans will spell financial disaster for consumers!” they lamented. It’s like they can’t bare us, the consumers being happy! I want to pay quick and painless! What kind of masochist wouldn’t agree with that? And surely, they must be exaggerating, what difference does it make if I use my card at the end of a long, soul destroying line, or see my total as I exit the store?!?

Thankfully, sane voices reminded everyone that it’s no different than contactless and that we’ve had around for quite some time now. And that is working out just fine for us. Or is it?

Contactless – what an unfortunate name since you have to tap the card, effectively making contact!- usage reports are showing it to be an unmitigated success. According to Barclaycard, 4 in every 10 eligible transactions are contactless and if we factor in how some outfits have been slow in rolling our their capabilities of accepting the payment we can easily presume most customers who have the technical opportunity to tap to make a payment will do so.

While adoption is spectacular, we should take a closer look at the spending behavior. Some reports suggest that once the spending limit has been raised in Britain to 30£, people have increased their monthly spending by an estimated 20%. This comes chiefly from weekend overspend.

Imagine being at your local pub with a bunch of friends having a good ol’ time. Every time another round is ordered, the waiter brings his card reader as well to settle it. A fleeting beep and millisecond later, he nods, smiles and leaves. Seems you have paid by contactless. Magic. Except, the only thing you really know about the amount is that it was under 30 pounds. How much it really was is generally unclear and while largely irrelevant if you’re having a great evening, using Chip and Pin would have allowed you that brief moment of financial responsibility while it asked you to approve the amount before entering your pin.

The UK Card Association tells us the average contactless spend is of 8.80£ – so it’s clear they are being used for rather large purchases not transport which would amount to smaller transactions. Now evidently in the absence of a limit of 1000£ we ought to be relatively safe from instant financial ruin however if we look at the same stats, half of the contactless cards in the UK are credit cards which makes the actual spend much higher.

While thanks to the –arguably- booming economy the average UK could afford to mindlessly tap and use contactless about 22 times a week before they finished their entire disposable income, according to the Money Advice Service four in ten adults in the UK do not even have 500£ in savings. That alone is a bleak picture of the future even to the untrained eye.

Maybe it’s time we stopped debating “cashless” -which is evidently the future – and start debating “mindless” which is already the “now”.

Personally, I’m a fierce personal responsibility fan, so I’m far from advocating for not having contactless payments, far from it, in fact, the limit should be raised not only to match that of Australia or Canada (around 55£) but to however much the user chooses, so that it breeds financial consciousness. I am simply pointing out that as we’re optimizing the ease of access, frequency of usage will increase and consumers need immediate visibility to gain control.

Credit score agencies have been quick to point out the dangers of overspending when using contactless but they also make it sound as if their technology is the answer to counterbalance it by information which is deceiving. The information a consumer gets from a credit agency is post-factum, the damage or overspend has already been done. Having immediate, contextual and relevant visibility of one’s finances is a must that lays with the money provider themselves – the banks.

One could argue they ought to have first put in place the tools to keep us aware and informed of our spending habits before they moved into faster payments an in era of dangerous consumerism and lack of spending restraint.

if-ignorance-is-bliss1

Instant spending alerts, clear free-to-spend balances, contextual notifications relating to a customer’s money and relevant information about spending’s effect on overall finances to aid perspective, are all still a figment of #FinTech’s imagination for all incumbent banks in the UK and yet customers have a way to spend even more, faster.

Financial health is not the retailer’s, the credit score agency’s or even the bank’s responsibility, it is undoubtedly our own but giving us all the information to achieve it is their duty and technology is not what prevents them from doing so.

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