One of the many lifestyle changes that the pandemic has brought is the use of electronic transactions. Banks responded quickly by introducing contactless payment methods through phones and digital wallets. To promote people to shift to contactless payment methods, Banks also increased the transaction limits on digital transactions.
Contactless reached a new high when entering a pin for the transaction was removed. To cope with the growing need for cashless payments, Countries like Australia raised their per-transaction limit to $200 . The increased ease of transaction has made it very convenient for people to maintain social distance at the point of sale. Newer POS devices are now well-equipped for QR-scanned transactions through mobile phones. This shift towards a cashless economy has given rise to many emerging challenger banks.
What is a Challenger Bank?
Challenger banks are newer and smaller banks that are competing with older, larger banks based on their technologically advanced financial services. These neo-banks are more accessible, easy to operate with, and technologically advanced. More and more people use their challenger banks for daily transactions, providing these neo-banks with important consumer data that is required to keep them relevant in the market.
Where you buy your morning coffee and the products you choose for groceries are a great source of information for banks to maintain their relationship with you.
Pros of using Contactless Transaction Services
Having a digital payment method can save you from the hassle of carrying cash around. Financial technology has introduced digital wallets that reside within your phone. You can also opt for a contactless card that can be swiped at a point of sales device without having to enter your pin. If you’re using your phone to make a digital payment, the device will scan the QR code in your phone’s wallet for the same purpose.
Contactless cards work on near-field communication (NFC) to scan your data and transmit it to the POS device. In recent years, the limit on transactions has been increased to make the service more feasible.
Contactless payments are quicker to make and have shorter queues as compared to cash counters that involve human beings. Furthermore, tap-to-pay involves chip technology that safeguards you from fraud, making it safer to use. To promote customers to use contactless, a lot of stores provide loyalty benefits upon using cards for payments.
Cons of Contactless Transactions
Although a lot of retailers offer card payments, it may still not be available everywhere and you will have to turn to cash. Contactless payments also have a per-transaction limit and require your pin for larger transactions. You might also need to contact your bank before making a large payment. While you may be used to making contactless payments in your country, you might not have the option while traveling somewhere else.
While transaction security may be promised, in case of theft or loss of card, you may lose money as contactless cards work simply by swiping.
Is It Safe to Make Online Payments Through a Neo Bank?
Since neo-banks do not have any physical branches, people can be a bit skeptical about trusting them for bigger online payments. To make online transactions safer for customers, neo-banks have applied biometrics and two-factor authentication for payments.
If you’re making a big payment, make sure your internet connection is also safe and you have access to your internet provider in case of an emergency. Some internet providers like Cox Communication deliver secure and high-speed connectivity to streamline all your process.
Why You Need to Move Towards Neo Banking
Moving towards adopting neo-banking for all major banking needs may look like a big leap of faith, however, rest assured that it is safe and probably more beneficial for you. Being completely digital, neo-banks promote paperless working which is environment friendly. You can access your bank and use all services through your mobile phone or laptop.
Creating an account is very convenient and easy as you can simply help yourself through their app, without having to pay for any registration fee.
Since Neo banks depend on digital presence, they make sure to keep their apps up to date and provide their customers with a smooth user experience. Unlike traditional bank apps that are usually slow and take longer, neo-banking apps provide instant financial transactions.
Neo banks also provide better interest rates than traditional banks.
Is The US Ready For A Cashless Economy ?
According to Gallup, 60% of Americans claim they make very few transactions with cash. Small businesses have also started using contactless transactions with signs on shops saying ‘No cash, Cards only’. This is a great step towards a cashless society. Cash payments take more time.
A lot of grocery stores now have dedicated self-checkout units that are card-only, making it convenient for customers and removing the workload on staff. Even charities have the option to pay with a card.
However, there is still some time before we may assume the world can go cashless. Older people tend to rely on cash as per habit and may not feel comfortable trusting digital transactions as readily. Similarly, even people who use contactless payments for most transactions still like to carry cash as a habit.
Going cashless or choosing the extent of using both modes of transactions is completely based on personal choice. Unless there are rules and legislation that define any strict regulation of the process, people will choose to make payments based on their priority.
Similarly, as long as customers prefer both modes of transactions so will businesses. Implying strict no-card or no-cash policy can be damaging for small or even large businesses as customer preference has to be kept under consideration.
Concluding
It is safe to say that we are moving towards a contactless economy, however, it will take long before making a complete shift. While trust levels in challenger banks, safety for online transactions, and access to contactless points of sales are increasing, there are still a lot of factors that need work before providing customers with a completely cashless economy.
