Cash, credit card use slowing disappearing as digital wallets grow


Few consumers take out cash today to pay at the register. In the near future, credit or debit cards may also disappear during transactions.

The recent launch of Apple Pay could result in more people using their smartphones instead of credit cards or cash to pay for purchases, despite consumers’ reluctance so far to adopt mobile payments technology, local experts said.

Nearly 80 percent of U.S. consumers are aware of so-called “digital wallets,” which allow users to pay for items at retail cash registers with a wave of their smartphones, but only 32 percent have used the technology, according to Kettering-based Thrive Analytics, a digital marketing research firm.

Introduced last month, Apple Pay will fuel faster adoption of mobile payments over the next 12 to 18 months because of the proliferation of iPhones, said Jason Peaslee, Thrive Analytics’ managing partner. In addition, the new technology addresses security and ease-of-use concerns that were roadblocks for consumers.

The U.S. proximity-based mobile payments market is projected to be $62 billion by 2016, according to eMarketer, a New York City-based market research company.

“Everyone wants to get a piece of that action, including large merchants,” Peaslee said.

Apple said more than 1 million credit cards were activated on Apple Pay in the first three days after the system launched. The system supports payment cards from American Express, MasterCard and Visa. It is accepted at 220,000 retail and restaurant locations including Macy’s, McDonald’s, Meijer and Subway.

Last week, Ohio-based First Financial Bank and PNC Bank both announced they would offer Apple Pay service.

Merchant Customer Exchange, a consortium of retailers including Walmart, Best Buy, Target and Sears, is test-marketing a rival mobile payment system, dubbed “CurrentC,” that is expected to launch next year.

Currently, Starbucks has the most successful mobile payment system in the U.S. The coffee chain said it averages 6 million weekly transactions, or 15 percent of all Starbucks purchases, via mobile devices.

Thrive Analytics’ research shows growing adoption of mobile payments in low-dollar transactions such as coffee and food items. Seventy percent of typical digital wallet transactions are under $30, the report said.

Peaslee doesn’t expect consumers to give up cash any time soon. But given the number of credit, debit and loyalty cards people carry in their wallets, a secure frictionless payment system on a mobile or wearable device “would be wonderful in consumers’ eyes,” he said.

Mobile payment systems such as Apple Pay and Google Wallet, a competing technology developed by Google, use NFC, or near-field communication, a short-range wireless technology that allows two devices in close proximity to exchange data. To accept mobile payments, retailers’ checkout systems must be equipped with an NFC reader, which can cost between $250 and $300.

Last year, Dorothy Lane Market upgraded the checkout systems at its three area stores with NFC capability, said Marcus Levin, the local independent grocery chain’s information technology manager. The DLM stores in Oakwood, Springboro and Washington Twp. now accept both Apple Pay and Google Wallet.

Levin said DLM is seeing growing digital wallet usage, particularly among “Generation X” consumers, which includes people born between 1965 and 1980.

“As the iPhone 6 reaches more market saturation, it will start to catch on more,” Levin said.

Currently, Apple Pay only works on iPhone 6 and iPhone 6 Plus smartphones, as well as the new iPad Air 2 tablet for online payments. Google Wallet requires an NFC-enabled Android device.

DLM stores added Apple Pay and Google Wallet to allow customers to pay using the method of their choice.

“It’s a matter of convenience to them. If they want to leave their purse in the car, they can just pay with their phone. Or if they still want to shop by the old method, it is still going to be the same,” Levin said.

Thrive Analytics said concerns about security was the top reason people haven’t used digital wallets.

Apple Pay purchases must be authorized using the mobile device’s fingerprint scanner. Actual credit card numbers are not stored on the device.

“Apple offers an easier and safer way for transactions, and is a massive improvement, but by no means is it perfect,” Peaslee said.

Many retailers are supporting MCX’s CurrentC because it will collect customer data across a number of participating stores, allowing them to better target consumers with deals and loyalty programs.

In contrast, Apple Pay doesn’t collect any transaction information that can be tied back to the user.

Peaslee said retailers will be taking a step back in terms of the data they typically get from credit card purchases.

“Retailers won’t know what shoppers are buying because one-time payment numbers and dynamic security codes will be used to complete the transactions. You won’t see what was purchased,” he said.


Reader Comments ...


Next Up in Local

Woman reportedly attempts to steal occupied vehicle, crashes at Dayton gas station
Woman reportedly attempts to steal occupied vehicle, crashes at Dayton gas station

A woman reportedly attempted to steal an occupied vehicle, and as a result, crashed into two other vehicles at a Dayton gas station Tuesday morning. Officials responded to Sunoco gas station, located at 1502 Wayne Ave., on reports of a crash around 12:45 a.m., per initial reports. Dayton police say the woman reportedly jumped inside the driver seat...
Vacant house fire in Harrison Twp. considered suspicious, officials say
Vacant house fire in Harrison Twp. considered suspicious, officials say

UPDATE @ 2:20 a.m: A vacant house fire that occurred on Lodell Avenue early Tuesday morning is considered suspicious, according to Harrison Twp. fire officials. The structure, located in the 2100 block, was fully involved when crews arrived on scene just after 1 a.m. No other nearby homes were affected as a result of the fire. No injuries were...
WPAFB Tuesday Weather: Cool, less humid conditions through the day
WPAFB Tuesday Weather: Cool, less humid conditions through the day

WRIGHT PATTERSON AIR FORCE BASE—Skies will become mostly sunny as we head through the day with slightly cooler, less humid conditions, according to Storm Center 7 Chief Meteorologist Eric Elwell. Temperatures will still reach into the middle 80s. Even cooler and less humid air will arrive this evening with a comfortable Wednesday on tap. Skies...
Clark County Pet of the Week
Clark County Pet of the Week

Meet Rocky B. He was actually adopted and in a home for nine weeks but recently returned because he didn’t like the neighbor dogs and had some senior accidents in the house. Rocky B is a sweetheart though and smiles everyday. His adoption fee is $65 and includes his neuter, vaccinations including rabies, worming, microchip with a free lifetime...
Champaign County Pet of the Week
Champaign County Pet of the Week

Lily is a 4-year-old female domestic short-haired cat. She was brought to us by her owner. Lily is a laid back, easy going kitty who gets along well with other cats. She has been spayed, is up to date on vaccinations (including rabies) and has tested negative for feline leukemia. Her adoption fee is $50 with an approved application. Come visit Lily...
More Stories