Digital Payments: Good Or Bad For Society

📆This Week’s Topic

This week we will be talking about digital payments and how they are taking over the economy. We talked about digital payments such as Apple Pay, Google Pay, Venmo, and Cashapp in January of this year and how they influenced banking. The link is here. Today we revisiting that but today we are talking about how it affects society rather than banks.

💳 Cause & Effect

Google Wallet launched in 2011 with Apple Pay launching just a few years later in 2014. These were the first major players in the Tap-to-Pay/Digital Payments market. As we went into later part of the 2010s we began to see more people use with these digital payments methods as well as credit cards compared to cash, this has resulted in the widespread use of these payment methods, with people using less cash. This means that soon, if we keep up with current trends, a very small amount of people will be using cash in the near future.

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📊 Statistics

Even though digital payments are the most convenient, most secure, easiest way to pay; there are downsides. Digital payments are really bad for homeless people because then it is harder to beg as consumers won’t be carrying cash anymore. According to a 2022 Pew survey more than 60% of adults with a salary of $100,000 or higher use digital payments whether that be Google Pay, Apple Pay, or some other software. According to Capital One Shopping, Apple Pay is home to 65 million users, and is expected to grow over 84 million by 2030. This just shows how big of a market digital payments is.

🔚 Outcome & Effects

With the growth of these digital payments is likely that the software will get better, more secure, easier to use, and more widespread. If the rate of use of these tools continue to grow at a rapid pace cash will see less and less use. This is a big problem for businesses because cash is free and doesn’t have a fee to accept, cards have a small fee to accept, and digital payment have a medium-size fee. This means that for businesses it could mean that instead of getting 100% of sales with cash they may get 97% of sales instead. Even though this sounds like a small change if a business collected $4,000,000 in sales in a given year they would only keep $3,880,000. This means that business would lose a whole $120,000 just in processing fees. This means that affluent customers are going to be benefited by these changes to digital payment while less well off people would be disadvantaged due to cash being less widespread. This would affect them because less affluent people tend to use cash more.

⏳ Final Summary

In Summary, the summary of digital payments is a very mixed bag. For some richer people it is good as it is more convenient than cash or card and is a much safer payment option then either. This is because you card information is encrypted as well as they are locked with the phone. But, for people in extreme poverty this is bad because cash is more important to them as that is how beggars receive money. This is bad for all businesses who take card/digital payments because digital payments are more expensive for companies to process those payments. This is because credit card companies like Square make you pay more to process those transactions and the average is 2.7%-3%.

🙏Thank You & Important Information

Anyway, thank you so much for reading this edition of Friday Finance. We are really proud to announce that Friday Finance has been in businesses for over a year. This marks the celebration of our work to provide you content. Thank you so much for your readership and if you would like to make a donation you can do so below. Anyway, have a great week and I will see you next week.

Jacob Gans

Friday Finance