Paper, Plastic or Digital?

In a world saturated with payment options, the consumer has a choice to pay in cash, by card, with their phone, or perhaps in the future, without having to lift a finger at all. The challenge for banks and retailers is not necessarily presenting the single best option to the consumer, but rather, providing the most convenient payment method at that given time. The evolution of payments is not one of displacement, but of choice.

Even as we move to currencies that have no fiat, such as Bitcoin and other electronic, blockchain-based tokens, it’s important to remember that plastic cards did not make cash extinct, and it’s unlikely that mobile payments (or even cryptocurrency) will either.

Mobile payments have long been touted as the next revolution in personal banking, and yet adoption has stayed shockingly low. This came as a surprise to the industry, but also revealed something about consumers: convenience and security both have to be present for widespread adoption.

At Money 20/20 last year, we spoke with consumers about their payment behavior, and over half of respondents (in developed markets) chose convenience as the most important factor when determining which payment method to use. In total, more than 91% of those surveyed said that a debit or credit card was their most common form of payment. While mobile payments have made certain transactions easier, uneven merchant adoption and spotty technology have ensured that cards remain more convenient.

In addition to convenience, consumers still view their cards as being more secure than other options, and almost half of those polled at Money 20/20 refrain from mobile payments due to security concerns. This is partly due to familiarity and habit — physical things are still more trusted compared to whatever might be powering a mobile transaction, especially with the recent industry-wide adoption of EMV chips. It’s also partly due to a lack of education about the technology and uneasiness about digital banking in general. Until there is a better understanding of how mobile payments work, consumers will likely continue to prefer their cards.

At the same time that mobile payments are experiencing slow adoption, cash is experiencing slow retirement. Due to technological or financial barriers, or to convenience and security factors, cash remains the key form of payment in many economies and industries.

Over 85% of global consumer transactions are still performed in cash, and this trend continues to dominate small transactions even in the U.S. as ATM transaction levels rise. Cash is unlikely to disappear as long as it still affords value at any given time for being the easiest to reach for or the safest to use. With all the new payment technologies offered, we are quick to forget that cash is still the most essential form of payment, accepted and exchanged in the most places, and always the last to be refused.

As cash and cards remain central to how consumers pay, the strategy for banks and retailers should not be to anticipate the end of their use. Rather, it should be to continue incorporating cash and card payments, along with emerging payment technologies, into an integrated multi-channel connected commerce system.

Diebold Nixdorf has continuously worked toward this goal in terms of providing technology that services all payment methods. Our ActivEdge card reader continues to combat fraud and enhance card security by rendering every existing type of card skimmer obsolete with the simple and elegant solution of rotating the card 90 degrees. The recently debuted Extreme Self-Checkout Concept is ahead of its time by serving as an ATM, POS system and self-checkout all in one. At just one and half times the width of a dollar bill, it can be placed anywhere and accepts cash, card and contactless payments. These innovations aim to create an unprecedented level of convenience, enabling consumers to bank and pay across channels anytime, anywhere, and in any way they want.

In the end, it’s not about choosing between paper, plastic or digital. It’s about having all three options available, interconnected and interchangeable. Are you ready to evaluate the payment options available to your consumers? Let’s talk today!