Plastic Money: Is it Really the Future?

The bank has claimed that the 300-year old system of the paper notes we are all used to will be replaced by a more environmentally friendly and economical system of polymer banknotes.

The phrase “Paying with plastic” may now take a very different meaning to being another term for a credit or debit card.

The change to plastic bank notes is a move that an online Telegraph poll seems to approve of; but in the era of increasing payment technology do we necessarily need a new type of note for our cash?

Contactless Payments

Many companies have begun to include contactless payment in their credit and debit cards.

Major Banks such as Barclays, Lloyds and NatWest, as well as credit card giants like Visa have already begun to use this technology.

Spending is limited to 20 per transaction via the contactless method and transactions will occasionally require you to enter your PIN as a security check.

Most banks will also show which transactions have been made via contactless payment.

Mobile Payments

Smartphones have seen a huge surge in popularity. Their main selling point has been to cram lots of different types of technology into a mobile phone handset. There are technology blogs like Warrington Worldwide that discuss the impact of technology in today’s world if you want to delve further into this area and see why smartphones have become so impactful.

There is a number of ways that mobile payments can be made.

NFC (Near-Field Communication) payments – you may have seen these receivers on the likes of buses and it is what is used for your Oyster card when using the London Underground. This is at the centre of the contactless payment cards outlined in the previous section.

WAP (Wireless Action Protocol) Payments i.e. mobile internet/mobile app based payments are also another option. This method has been pioneered by Barclays PingIt and PayPal InStore.
This method generates a barcode on your smartphone screen that is scanned by a participating retailer.

PayPal will also be launching the PayPal Beacon soon which still uses WAP technology, but allows users to check into an outlet and pay the bill via the mobile app rather than by scanning a barcode.

Security

One of the advantages to plastic notes is that they will be much harder to counterfeit compared to the standard paper notes currently in circulation, allowing for a greater variety of design that is able to incorporate security features.

There is still a large amount of people who doubt the security capabilities of mobile technology. Some payment methods simply ask you to touch your phone to the business’ receiver and the transaction is complete. This is conducted without a PIN – which has led people to the question the security, should your mobile be lost or stolen.
Purchases made via the contactless payment method are limited to smaller amounts of money, which offers some protection.

One of the most noticeable features of the new iPhone 5S was the fingerprint recognition inside the home button. This is an obvious step towards greater mobile payment security, however, Apple have stated that it will only be used to unlock the phone and allow access to payments via iTunes and the technology is not open to developers – meaning there will be no handy little apps that we can use to verify our payment with a quick scan of your finger.

Money Management

In terms of money management, many would feel the greater the barriers are to allowing spending, the more you are able to do to measure and manage your spending. Therefore you may see the tangible aspect of actually handing over cash as something that will limit spending.

However, this comes down to personal preference – many of the new technologies will allow smartphone or tablet apps where you can review your spending and automatically update from your accounts.

Some may prefer to look at the things they have been spending their money on, and decide how they can manage it from the information they get.

Whatever method you use, the main thing you should focus on is ensuring that you are informed about how much you have to spend and how much you need to save, as well as keeping your payment details secure.

This article has been written by Jason Scott on behalf of Loans4Tenants. For more top finance tips visit https://www.loans4tenants.com.