Are Effortless Payments Too Easy?

The Amazon Echo is either the greatest thing ever or it’s the devil. The Amazon Echo, for those who don’t know, is a device that connects you wirelessly to Amazon at all times. Among various functions, it enables you to use audio commands to order products, using default payment and shipping settings. Translation: You can get whatever you want, whenever you want it, without entering a single keystroke. You just say what you want out loud. If Charles Foster Kane had the Amazon Echo, Citizen Kane would have been a very short movie. “Rosebud,” he would whisper, and Amazon operatives would spring into action. Sled delivered. The End.  There is beauty and wonder in the effortlessness of these transactions. And Amazon Echo is only one example of this new style of payment experience. New and established examples abound: Amazon One-Click: Remember when you had to enter your payment information manually each time you made a purchase? Now everything is “on file.” See also: every other online retailer, everywhere. Uber: Hitch a ride anytime and pay with a single click. Apple Pay: Wave your iPhone over the POS terminal at Whole Foods and all of your pricey groceries are paid for as if by magic. Venmo, Square Cash, RealPay: Now there is no excuse for stiffing your friends. Squaring up is easy and immediate. [Name Your Favorite Retailer Here]: Lusting after those boots you saw on your lunch hour? Search them up on your mobile device and admire them all day long. Can’t resist? Buy them literally any time – during a meeting, on the commute home, while your unsuspecting family sleeps. Unsafe at Any Speed? Herein lies the problem. As payments have become effortless, so has spending. That may be cool in the moment, but what about the long-term impact? A month of impulse purchases, chipping in for lunches, riding around town and unconsidered $8.99 cauliflower at Whole Foods adds up quickly. In fact, forget the monthly tab: A single day of effortless payments can wreak havoc on the budget. Are effortless payments unsafe? “From a security standpoint, many of these new payment methods are relatively secure,” says Michelle Thornton, Director of Product Development at CO-OP Financial Services. “For instance, Apple Pay – even in spite of security concerns that have come up since its introduction – has tokenization built into it. That means your payment information is arguably more secure when you use Apple Pay to do a transaction than it is using your card.” Instead, Thornton says, insecurity stems from human fallibility. “For starters, there’s a major safety issue when anyone is trying to do a mobile transaction while driving a car. That has nothing to do with payments security and everything to do with automotive safety, but it’s a real concern.” Also of concern: Thanks to mobile technology, people are shopping and spending while multitasking. Focus on a budget? Evaluate the need for overpriced items? This may simply be impossible given the distracted state of many mobile users. “Beyond that, you could ask whether your money is safe from impulse spending,” Thornton continues. “The ease and ubiquity of spending opportunities can be a hazard. And because payments are more effortless, they may be harder to track mentally. Very quickly, a number of small purchases can add up to a big budgetary hit. Using mobile budgeting tools that alert you when you are nearing your budget threshold or even prevent you from going over your budget are likely to gain traction as ubiquitous spending escalates. ” Who’s Responsible Here? If effortless spending is a problem, it’s admittedly not one of the worst problems you can have. Yet, it raises issues for everyone who participates in modern commerce. Is it more difficult to manage your money now than it was five years ago? Probably so. Money is more slippery now – and the rate at which it can slip through your fingers makes it far more difficult to grasp. As retailers make shopping – and therefore spending – easier and easier, do they have a social responsibility to ensure that they’re not over-enabling their customers? How do you as a credit union help members maintain their financial wellbeing in this new environment?
  • Are you providing the digital banking tools members need to be up-to-date on their finances?
  • What advice do you offer to members who want to get a handle on money management? Just as the old advice to balance your checking account monthly now seems alarmingly sparse, more recent advice to check your account balance periodically online is beginning to sound lax. Then again, how much is too much?
  • Do your members understand the new rules of security?
  • How many can answer this question: How easy is it to make an unintended purchase on the apps you use? If you thought butt dialing was bad, butt spending raises the issue to a whole new level.
Finally, is it time to consider new tools for a new age? “At CO-OP, we’ve introduced a new controls and alerts app called CardNav. Among other things, it lets members set spending limits by transaction or category,” says Thornton. “As we move into a new kind of reality in payments, it might indeed be time to revisit the tools we offer. People already have access to these new payments experiences. It only makes sense to offer them new ways to manage their experiences.”