The Modular Future

February 8, 2016

Digital platforms are radically altering the industry’s value chain

The Growing Pains of Business Ownership

February 4, 2016
/   Insights

This article by Stefanie O’Connell first appeared on stefanieoconnell.com in November 2015. Confession – I’ve made a major mistake in growing my business. Though my earnings have climbed exponentially over the past two years, I found...

The benefits and challenges of the Internet of Things

February 3, 2016
/   Insights

The convergence of operations technology and information technology presents new and expanding market opportunities. The “Internet of Things” is a center point of this convergence. IoT can bring remarkable benefits to today’s ever-changing business...

Mobile Banking Surprises Yet to Come

It had to happen, and apparently it has: In the year just passed, according to the new report “2015 Mobile Banking, Smartphone, and Tablet Forecast” from Javelin Strategy & Research, 30% of customers used...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Making Banking Fun: Gamification in Financial Services

August 5, 2013
/   Insights

Recently, the Banking.com team sat in on American Banker’s webinar, “Gamification in Financial Services: Five Proven Ways to Get an Edge,” which shared how leading brands in financial services have applied gamification to reach...

Technology M&As: The Beats Go On

May 29, 2014
/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below. Virtual Banking Worlds Provide Tangible Lessons American...

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

Online shopping, mobile wallets, biometric ID – given all the media attention around new ways to pay, you’d be forgiven for thinking that cash has quietly shuffled off this mortal coil. But it is not so and this Christmas – when retail spending reaches its peak for the year – consumers appear as wedded to cash as ever.

According to Bankrate and Princeton Survey Research Associates International, four in ten Americans will be making their festive purchases with cash.

Considering US shoppers will spend an average of $805.65 on gifts, decorations, food and other Christmas purchases, according to a survey for the National Retail Federation, this is not a small amount of notes.

Why cash?

When we talk about payments it’s easy to focus on convenience, security and acceptance. But one of the things about cash versus plastic is just plain home economics. When you have cash in your hand you have control over the spending; it’s not possible to fork out any more than you physically hold.

“Paying with cash or debit means people definitely have changed their priorities. They’re going to buy what they can afford and no more. That’s very good,” says Ronit Rogoszinski, wealth advisor at Arch Financial Group.

Budgeting is clearly a factor and this is demonstrated neatly by the differences between low and high-income households.

At 53 percent, those with household incomes of less than $30,000 were most likely to say they will use cash for the majority of their purchases. This compares with just 21 percent of those with a household income greater than $75,000 who said cash is their preferred channel.

Plastic fantastic

For higher earners – those with household incomes above $75,000 – plastic is the number one payment method. In particular the richer households prefer credit cards over debit cards – again sound budgetary decisions are a factor here.

Lower earners prefer the debit card. With a debit card a consumer can only spend what’s in their checking account. Unlike the certainty of holding cash, this could be more than they’d like to spend. But unlike a credit card, at least they have the funds and it’s not borrowed money.

Security is another factor. Credit cards offer greater protection – zero liability in most cases – while a debit card doesn’t tend to offer the same level of protection.

Again, it’s interesting that cash remains so popular given the security risks of theft and loss. But in payments there is always a choice and research hints that electronic payments in the US market have suffered because of 2014’s retailer data breaches. ATM Marketplace found a third (34 percent) of US consumers are making more cash purchases because they are worried about card details becoming compromised following a spate of breaches at some of the country’s top national stores.

Mobile wallets

In terms of in-store shopping, it’s arguable whether mobile wallets are really making much of a dent. Cash remains widely used and 84 percent of smartphone users told Bankrate that they do not plan to use a mobile wallet app to make a purchase. Just one percent of shoppers said the mobile wallet would be their go-to channel this year, the same percentage as for checks.

A worrying sign for providers is that the biggest obstacle is the perceived security risk – 36 percent said they are not secure enough. Meanwhile, one in three (31 percent) said other payments are more convenient. The good news is that only 12 percent said they don’t know how to use mobile payments.

Being secure and convenient are meant to be the two big draws for mobile payments – clearly there is work to be done persuading people this is the case. For now, it’s still hard to get people to part with their cash – except at the tills.

(403)

Insights

Banking.com’s perspective on industry news and trends

(304)

Spotlight

Must-read news and insights from financial industry leaders

(172)

Voices

Compelling voices and contributed content from around the web

James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp