Being of the generation that walked the earth when debit cards first arrived on the scene, I remember the marketing push from the banking industry was convenience. We no longer had to race to the bank between their business hours (10 a.m. to 3 p.m.), fill out deposit/withdrawal slips, stand in line with our bank books and wait for an open teller (because there were usually only one or two available). No tellers for us now - we could go to an ATM for cash. We could now bank on our own schedule!
Then came online banking - another miracle of technology. Now we didn't even need to leave the comfort of our own home to pay the bills. We have broken free of the shackles of "bricks and mortar" banking! Could it get any easier than this?
The next big thing
The latest advancement is the "digital wallet". Now parting with our hard-earned dollars is even easier. Sounds a little too easy to me - I already spend too much. It seems the social payment revolution experts are already helping me part with my money (Apple, Amazon, Google and PayPal) and are now big players in the digital wallet game.
If a tree falls in the forest...
The difference between using the digital wallet and a debit card to make purchases is the simplicity of it. I don't even have to punch in a PIN number or confirm the purchase with a cashier. Yet, when I look at my bank balance, it still went down. "Frictionless spending" is the new term, according to this article from HubSpot. Spending isn't "real" anymore. Have you ever been the victim of a pickpocket? Well, you have now! But in this case, you have no one to blame but yourself.
Out of sight, out of mind
One of my favourite financial gurus is Gail Vaz-Oxlade. Not only has Gail authored a slew of books to help people take control of their financial future; she also had two television shows on the subject. One way she helps people to understand how they are mismanaging their money is to make them budget specific amounts for each expense (transportation, food, entertainment, etc.) and to use cash for daily purchases. This makes them aware of how much they are spending each day and makes it tangible to them. This lack of tangibility is why the digital wallet worries me.
You can bank on it
Working in the banking industry, I know how stiff the competition is already. In Canada, banks and insurance companies have been waging a battle for years. Now, with the digital payment surge, there is a new addition to the competitive landscape. Many retail financial firms still haven't grasped the full potential of digital disruption, according to Oliwia Berdak, an analyst with Forrester Research.
Show me the money
If I look in my wallet and see I don't have the money to pay for that fabulous pair of shoes, there's an excellent chance I won't buy them (at least until my next pay arrives in my account). Can I say the same if digital wallet technology is my new reality? I can't say for sure - and I watch my spending closely.
My "two cents"
Although I never thought I'd become nostalgic for the pre-debit card days of banking, maybe I am. I have to admit, when there was some effort involved to withdraw our money from the bank, we were less inclined to spend it. For those in the crowd who are impulse buyers, there's no telling what kind of trouble lies ahead.
Stay strong, and watch your bank balance prosper!
