What’s (Not) in Your Wallet?

What’s (Not) in Your Wallet?

Have you paid for something recently without touching your wallet? If so, you may be using a form of frictionless payment.

From ordering groceries online to paying for your morning coffee through a mobile app, frictionless payment methods make transactions easier and faster.

Wearables, digital wallets and devices that communicate with each other have made credit cards and cash unnecessary for many. According to Capgemini’s World Payments Report 2018, non-cash transactions grew to 482.6 billion worldwide in 2016.

These types of transactions will require even fewer steps when shopping is integrated into consumers’ daily lives. With an Amazon Dash button installed on the pantry door, you can order your favorite granola bars in time for breakfast tomorrow. Other innovations rely on voice recognition to trigger your shopping account, which allows you to stock up on items with a simple command.

Beyond purchasing household goods and products, frictionless payment methods help ease tedious processes like splitting a ride-share bill.

“Millennials – and younger generations – are embracing digital payments for their simplicity and ease of use,” said a spokesperson for Venmo, a digital service that facilitates payment splitting with friends. “Mobile has fundamentally changed commerce by enabling new opportunities for commerce to happen in new contexts.”

Of all the emerging payment technologies, biometrics promises to be the most seamless for customers. Currently, fingerprint and facial recognition allows you to access your account data via devices such as a smartphone and pay accordingly, but naked biometric payments won’t even require you to have a device on hand. Retailers will simply scan a physical trait – like your fingerprint, iris or face – to associate you with your payment account.

While customers may appreciate the ease of not having to swipe a card or enter a PIN, security concerns may delay widespread use of most frictionless biometric systems. As technology evolves, it will be up to consumers, financial institutions and retailers to strike a balance between privacy and convenience.

Learn more about your finances. AAA.com/YourMoney

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