Ron Delnevo, managing director of independent ATM operator Bank Machine Ltd., says new research into contactless cards shows that cash remains a viable and strong payment choice for consumers.
According to APACS, the United Kingdom's payments association, in 2007, six out of 10 payments were made with cash.
"I find it truly risible that Visa is promoting their latest research, which shows that 41 percent of people in a contactless trial felt it was an easier and faster way to pay for small items than cash," Delnevo said. "This of course means that 59 percent of consumers, in fact, think that cash remains the most convenient payment method. They are simply promoting the fact that, after spending tens of millions of pounds on research, development and advertising, they have made a 1 percent difference to consumer habits. I am not sure I would be claiming this as a big success and would consider it, frankly, a waste of corporate cash."
Delnevo says the only solid conclusion from the payWave trial was that users had security concerns about the use of contactless payment methods. That conclusion, Delnevo says, echoes the results of a survey carried out when contactless cards were launched in the United Kingdom, finding that 70 percent of people believed that the introduction of contactless systems would increase fraud.
"At a time when everyone should be watching what they are spending, and in the midst of a worrying rise in debt, it is all the more cynical for card issuers to continue to promote the use of contactless cards — fully aware that research now proves that consumers spend more on cards than they do when using cash, even if they can’t afford to do so," Delnevo said. "Moreover, when the British taxpayer will now be picking up the bill for the reckless behavior of financial institutions, banks have a responsibility more than ever to the public — and that includes encouraging sensible spending habits."
According to research conducted by New York University and the University of Maryland, people often are prepared to pay significantly more when they know that they can pay by card.
Additionally, increased fees from MasterCard, announced this week, also are expected to take a toll on the card industry, Delnevo says. Retailers in the United Kingdom complained this week that MasterCard doubled the fees it charges, causing financial drains on U.K. shop owners.
"This increase in charges confirms that both retailers and the British public should be extremely wary of relying on plastic cards," Delnevo said. "Cash remains the most popular means of purchase in the U.K., and now we see why. Cash is completely within the control of the consumer in every respect, whereas with cards, it is a case of 'spend too much now and shed tears later.'"