Simon Read: Smartphones are not so smart if payments lead to greater debt

What could be more efficient than simply using your phone to pay for things?

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The Independent Online

Tell me this, will you miss money? I ask the question because there has been a wave of publicity about the fact that cash is losing popularity. Figures from the Payments Council reveal that the total number of cash payments made by consumers, businesses and financial firms in the UK fell to 48 per cent last year, from 52 per cent in 2013, the first time that “non-cash” payments have topped those made with hard currency.

That’s a trend that’s unlikely to be reversed and, if it continues at the same level, many of us will use cash for the last time within our lifetimes. If the process accelerates, we could all end up using our last coin by next Thursday at 3.25pm, or thereabouts, according to a firm of digital analysts that I’ve just made up. But does the news mark the end of money? I don’t reckon so. The figures actually confirm that, among consumers, cash remains the most popular way to pay. We still used coins and notes for more than half of all our transactions in 2014.

There are lots of good reasons why many of us will continue to do so. But are the people still relying on cash just the older ones among us, still stuck in the past and doing things the traditional way? There’s a certainly a general feeling that younger people are totally clued in when it comes to using technology to make living more efficient.

And what could be more efficient than simply using your phone to pay. Haven’t done that yet? You’re not alone, as new figures from Visa show that only one in 12 of us has so far used their phone for contactless payments. (I’ve tried it out and it is convenient to wave your mobile near a terminal when paying, rather than having to dig out cash or a plastic card). Phone payments are set to rise dramatically in the next five years, says Visa, until by 2020 one in four of us will regularly be using smartphones as payment devices.

But I for one will be carrying cash, for one crucial reason. Having money in my hand – whether coins or the paper variety – is an excellent budgeting tool. If I’m going to the pub, I don’t want to spend more than I can afford, for instance, so I only take the cash I need. When it’s spent, I go home.

When it comes to spending money during the week on non-essentials, I have a strict budget – our family finances really are that tight! I take an amount out of a cash machine at the beginning of the week and know I have to make it last. At any moment, I know exactly how much I have left to see me through the week.

Spending on plastic – or phones in the future – seems simply too dangerous for me. It’s too easy to overspend and get into debt.

I’ve spent too many years in debt in the past to know how uncomfortable it can be. Using cash as a controlling tool ensures I won’t unexpectedly fall into debt again, which is why you’ll still find me fishing for notes and coins for many years to come.

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