Contactless Payments Bad News for Consumers?

Going From Swipes To Waves May Increase Spending In Your Household

Making purchases has become as simple as a wave.
Making purchases has become as simple as a wave.
  • Making purchases has become as simple as a wave.
    Making purchases has become as simple as a wave.
    Making purchases has become as simple as a wave.
    Making purchases has become as simple as a wave.

The easier the method of payment, the more consumers tend to spend. Research
has shown that consumers spend more when paying with credit cards than they
do with cash.

Now a study released by MasterCard shows that consumers may spend up
to 30 percent more with the new contactless payment methods than they do
with credit cards.

Contactless payments take place with credit cards or smart phones that
have chips implanted with radio frequency identification, commonly referred
to as RFID. Consumers simply "wave" the card or smart phone over a payment
terminal rather than having to "swipe" the card through the terminal.

Contactless payment methods are becoming more common. Visa has recently
introduced PayWave; MasterCard has PayPass and American Express has
Express Pay. The MasterCard study predicts 150 million mobile devices will
be contactless enabled within the next few years.

The MasterCard study took some of their customers and divided the accounts
into low, medium and high spend segments based on their monthly spend prior
to introducing the contactless payment methods. The 30% increase in spending
was consistent across all three segments.

The study also found that after the first contactless transaction, users spend
an average of 25 percent more online, 64 percent more abroad and 20 percent
more in recurring payments.

"While this increased spending may be good news for banks and retailers,
contactless payments can be dangerous to the household budget," says
Bill Hardekopf, CEO of "You can now make a purchase
with just a wave of your phone without a thought about how much the
purchase really costs. It could make it too easy for some people to buy
something spontaneously or throw a few more items into the shopping cart.
Making good spending decisions takes analysis and discipline. We probably
need to feel the pain of money leaving our bank account to help us evaluate
if we can afford it and if we really need it."

Here are some tips for making a contactless payment:

* Remember that the rules of credit cards and debit cards still apply.
If your account runs through a credit card, pay it off completely on
time each month.

* If you can't afford to pay cash for it now, you can't afford it with
contactless payment.

* Responsibly using contactless payment takes discipline. Think about every
item you purchase as if you are paying cash. Write down each purchase in a
notebook so you can keep track of where your money goes. simplifies the confusion of shopping for credit cards. It is a
free, independent website that helps consumers easily compare credit cards
in a variety of categories such as lowest rates, rewards, rebates, balance
transfers and lowest introductory rates. It also gives an unbiased ranking
and review for each card. The Complete Credit Card
is the most objective and comprehensive resource on the Internet which
allows consumers to compare rates for over 1000 credit cards offered in this
country. Created by Hampton & Associates, the company has been analyzing
the credit card industry and supplying objective websites on various
consumer expenses for twelve years.

For more information, contact Bill Hardekopf at 1-800-388-1910 or