Contactless cards let customers pay quickly and easily, without pin numbers or signatures. But with impulse purchasing on the rise, they can also add an element of risk for the casual consumer.
Is this a problem?
According to a survey by The National Employment Savings Trust, 85% of Brits have spent money on something they've never used in the last five years. On average, they estimate that each person spent £129 on useless impulse buys. While that figure may be high, some are now starting to suggest that contactless cards could make avoiding those urges even trickier.
You might think that online shopping has already had an impact on impulse purchases, but consumers tend to do their browsing online and treat themselves when they're out and about. A study by LivePerson found that 61% of online survey respondents said they spend more in-store than online, and while around 50% occasionally give in to their urges while shopping online, 77% do so in-store.
Why is there a difference?
The difference between these behaviours is affected by how we shop in each environment. 78% of consumers use online shopping purely to research their purchases, while in-store behaviour tends to be more focused on the end-goal.
This behaviour is greatly encouraged by the large number of low-value item displays that seem to gather around till areas, which can easily be picked up for under the £20 limit that is currently imposed on contactless cards. Research from PayPoint already suggests that contactless payments drive impulse purchases, and numerous displays filled with chocolates, crisps and other snacks can make it difficult to resist the extra spending.
Will the problem get any worse?
The crafty store designs aimed to encourage our impulses look set to expand in the future. According to the Wall Street Journal, Mondel?z International Inc., the company behind an army of snack products like Cadbury and Oreo, are developing 'smart shelves'. These technological temptresses will deploy sensor technology to determine the age and sex of customers and play targeted adverts accordingly. This is worrying news for owners of contactless cards.
How can we avoid these impulse purchases?
The key to resisting impulse purchasing is to take the level-headed approach of online shopping into the real world, and LivePerson calculate that one in four consumers are already researching products on their mobile phone while in store. You can also take a few steps to prepare for the onslaught of temptation before you shop, including:
- Planning purchases in advance, either by checking prices online or knowing exactly what you need and sticking to it
- Avoiding needless 'buy one get one free offers': they're only valuable if you needed two in the first place
- Sleeping on big purchase decisions, and not giving in to pushy sales staff
The best response, however, is financial vigilance. Keeping track of where your money goes is crucial when looking at the effect of impulse spending. While this can seem tricky, our free budgeting software collects all of your outgoings into one easy interface, making it easy to stay on top of your finances.
What do you think? Are contactless cards affecting your spending habits? And how are you taking back control? Let us know your thoughts below.
Posted by Marc Murphy, Marketing Manager at Money Dashboard.