Credit Cards and Mobile Payments: What Your Business Needs to Know for Now and the Near Future
Monetary exchange of goods has been a part of society for ages, though it has taken many different forms throughout the years. There was a time when someone would mostly barter with another person; they might trade a banana for an apple. That changed when society began to value precious metals, which is why people used gold or silver in exchange for services or goods. Of course, we now use paper money and electronic forms of cash like credit cards or mobile payments, which is impacting the day-to-day lives of people around the world.
To learn more, checkout this infographic created by Rutgers University’s Bachelor of Arts in Business Administration program.
A Closer Look at the Impact of Credit Cards in the US
There is no denying that credit cards have taken the country by storm within the last few decades. Most people have a credit or debit card, and many businesses accept a credit or debit card as payment.
The US has calculated that Americans now owe approximately $884.8 billion on credit accounts, which is definitely a number to pay attention to. The number may rise, but it is clear to see that American consumerism is recovering since many people are comfortable with acquiring debt.
The United States has also noticed that about 4.88 percent of the US economy was transacted by a credit card in 2015; that number is likely to rise.
American Spending and Debt
American spending was a little rocky due to the recession, but that slowly changed when the economy improved.
It seems that Americans came out of the recession thinking of reducing debt, which shows that they were being a little cautious. The cause is not exactly known, but even though the average household has about 15,836 of debt, this debt is continuing to steadily drop as time moves on.
In fact, 2015 showed a debt average reduction of about 7 percent, which was more than the year before. People are starting to take control of their finances, which is a good sign for American business.
The introduction of faster and easier ways to deal with cash electronically gave rise to the e-commerce industry. This form of commerce is becoming one of the most profitable industries. Many small and large companies are depending on Americans who opt to use an Internet supplier rather than going to the supermarket or a regular brick and mortar location.
Not only is e-commerce on the rise, but there is also an effective mobile-to-mobile commerce that is quite healthy. For example, share-economy businesses help normal people offer services through applications like Uber, Lyft, or Instacart. Of course, these are just examples, but it shows the kind of opportunities that mobile commerce has given to Americans.
Traveling Abroad is Much Easier
Years ago, going outside the country meant that an American had to spend money to convert their cash to the local currency. These fees usually ate up a lot of money, which could be spent on other things. The introduction of credit cards made the conversion a little easier for travelers, but it was still expensive. Yes, credit cards offered the DCC or dynamic currency exchange, but you still had to pay a three percent charge whenever currency was changed.
Technology continues to change things around, and the introduction of the EMV chip is making currency issues when traveling abroad an issue of the past. It is almost possible to avoid foreign transaction fees altogether, which should help adventurous Americans who want to get a taste of the world outside of the United States.
Security Amongst Electronic Cash is Improving
Everyone knows how dangerous security hacks and personal identity theft can be. Some of these individuals have been able to rob Americans, and others, right under their noses with just a few computer codes. This is something that is starting to change with the introduction of the EMV chips just mentioned.
These little chips, implanted in some debit cards and credit cards, are making it a lot harder for those with ill-intent to use an account that is not theirs. This is because the chips come with trackable technology, which means that a bank will be able to see if an account is being used when not in the same location of the chip. This will be a red flag for the bank, and the consumer will be alerted.
The introduction of this chip back in 2004 has been steadily improving security. There has been a 32.5 percent reduction in credit card fraud, which has saved banks and credit providers a lot of money. These numbers are related to the UK, but there is a big difference.
The EMV chip has been so effective that many companies in the United States like MasterCard, Visa, Maestro, American Express, and Discover have issued a warning to American businesses. The warning states that they will no longer relinquish their liability to frauds if a company does not accept cards with the EMV chip. This change was effective back in October 1, 2015.
Mobile Wallets are Getting Popular, Too
The introduction of mobile wallets is shaking things up for businesses, people, and credit cards. In 2015, $214 billion was transferred through mobile devices. Out of all the companies available to businesses and people, Visa seems to be the one leading the mobile wallet industry at the time.
It is clear to see that mobile payments are making a big impact; in fact, Starbucks saw that about 15 percent of their entire monetary transactions were performed through mobile applications. The latest estimate shows that about 178 million Americans now have at least one smartphone.
Many companies have also said that investing in free Wi-Fi for the public is definitely part of their goals to ensure that every American has the opportunity to participate in this new monetary industry. There is definitely a lot to consider when it comes to these new changes like security. It is also wise to come up with better ways to protect mobile devices since so much depends on them now, but there is no denying that these changes are here to stay and will continue to evolve.