I was at a payments conference a few days ago—it’s a huge industry: The attendees include the big credit card processors, like Visa, MasterCard, Discover, and AmEx. Then there are banks, payment technology companies, and the people who make gadgets (Apple, Samsung, Google, etc.). And don’t forget the hardware people (they build terminals where you swipe and dip).
Sidenote: I learned the term “dip” at the conference. It’s an industry term for when you stick your card’s chip in the reader. You “dip” it. Anyhoo.
You know what’s more interesting? It wasn’t surprising, but it sure left an impact: everyone at this conference is trying to make payments as frictionless as possible. That’s right. There’s an entire conference, full of people, working diligently to make it dead-easy for you to let go of your cash.
Surprising, no. Impactful? Yes.
Think about your experience in the app store. If you use an Apple device, your credit card is stored for on-demand purchases. All you need in order to download Squawking Birds is a password. With the new iPhone, you might even be able to skip that. Imagine the ability to pay, simply by looking at your screen the right way. Or how about if your car was literally a payment vehicle? Drive the car, get charged for the fuel as you use it. You get the point: frictionless.
But, why on earth, would “they” want to remove friction? I’m sure you can see where this is going: they want to remove every speed bump that might stop your impulse to buy the thing. Whatever the thing is. Every time a merchant makes a sale, all of these payment industry folks get a piece of the pie.
And I’m One of Them
Obviously, if you’re in business, you want your sales process to be as easy as possible. With YNAB, we do our best to make our method and software as accessible as we can for a silky-smooth transition from free trial to subscription. As you can imagine, it’s not always easy to commit to budgeting, so we pave the way with lots of educational resources, plus expert (and friendly) help—just like any savvy merchant would.
Enter: The Savvy Consumer
So, as I ate my conference breakfast (sponsored by one of these large payment companies), I got the feeling that Visa, Mastercard, and all of these banks aren’t really hurting for cash. It’s almost as if we, as consumers, aren’t doing our job to stick it to the payments industry—like we’re not even playing the game.
Here they are, planning more frictionless payments, and us? We’re just handing it over! They’re clearly winning. And this isn’t your usual Whiteboard Wednesday, about sticking to your budget (which you absolutely should). No, this is about how these companies are trying to shift our entire economy away from cash.
The more money we spend via payment processors (and not in cash),
the more money the payment industry can make off of the economy!
If I were running that show, I’d be doing the same thing. So, what do we do? The answer isn’t “switch to cash” (although it’d be great if you did—cash is super cool, even if it’s not totally convenient).
The real takeaway is that we need to recognize the shift that’s taking place … and play the game, accordingly.
A Plan for Plastic
So, knowing that we’re shifting towards a preference for plastic (and all sorts of other mind-boggling, but frictionless, technologies), we need to be really aware. It’s totally cool that all of this magical technology will make things so easy for us, as long as we’re mindful about our spending. If you’re aimless, the credit card company wins. Walmart (who is massively into the payment tech game) wins. Merchants win. Basically anyone who would like your money, except for you, wins.
The bottom line is best summed up in Rule One: Give every dollar a job! Then make sure that your dollars stick to the plan. Think about this, the next time you go for a dip.
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