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To contactless and less cash- In a flash

Publication Date: Jun 25, 2020
 


Written by Darren Mizzi

To Contactless and less Cash – In a flash!

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study carried out by the Central Bank of Malta on Maltese payment habits in 2018, had found that although there was progress in the use of alternative payment instruments, the Maltese society in general still preferred the use of cash to purchase specific goods or services locally. In fact, at the time, “86.7%, 69.1% and 46.0% of households used cash to pay for groceries, consumables and non-consumables, respectively” (Central Bank of Malta, 2018). The same study had also found that the next preferred method of payment was by card.

Based on the progress registered in previous years, it would be expected that in subsequent years, specifically the remainder of 2018 and 2019, the use of cash would have been less and that this would not have been very different from the figures reported in 2018.

man-holding-credit-card-hand-entering-security-code-using-laptop-keyboard_1423-48 (1).jpgBut in the first quarter of this year, all this has changed. Rush buying to stockpile on food, awareness about the method of transmission of Coronavirus (COVID-19) and the adjustments to our daily life eliminating simple things such as a handshake resulted in a sudden shift, near shock, from cash preference to other payment instruments - specifically contactless, online, mobile and peer to peer payments. This was equally pushed by retailers who started to prefer the use of cashless payments to avoid change and touching coins and bank notes. Whichever way one looks at it, the speed at which society reduced “Human Touch” (thanks to Bruce Springsteen) to “Can’t touch this” (thanks to MC Hammer) was astounding; both nice songs though certainly both are not at all referring to payments.

Whilst there are no official figures yet as to the resultant amount of people that shifted from cash to other payment instruments, this number is expected to put a noticeable dent in the figures reported in 2018. It is also expected that people, consumers and retailers alike, who made this change will continue and even encourage this practice.

Despite everything, there are many benefits, other than just cash handling, to prefer, offer and use other payment methods. As a matter of fact, all this is very positive because the drive towards the use of alternative payment methods has already been in progress, though perhaps the COVID-19 situation accelerated the progress that would have been achieved in 3 to 5 years in just 6 to 8 weeks.

Alternative Payments – What’s in it for us?

There are a lot of benefits for both the client and the seller when using methods of payment other than cash. The sale conversion process that is the time from when the customer enters a shop to the completion of the checkout, is very fast. For example, if buying from a shop the time it takes to find the cash and issue the change is certainly slower than the time to tap the card with a POS, take the receipt and exit. This means that there will be less queuing and less things to handle, which in times like this is certainly beneficial.

Additionally, this also means less risk exposure to the seller because the money would have been transferred securely from the client to the seller bank accounts and in a traceable way that both parties can verify securely. This also means that there is less physical cash going around and thus reduces other associated risks.

Stay Safe – but that is always!

pay-goods-by-credit-card-through-smartphone-coffee-shop_1150-18769.jpgThese benefits do not mean that one should not practice caution. In the past 3 to 4 months, the hashtag “StaySafe” was certainly one of the most widely used hashtags, and indeed it is fit for purpose. When people shift to transact using alternative channels there are a few things one needs to do, check or indeed not do to “#StaySafe” too. Here are some important tips to consider when making use of the different channels, focusing specifically on contactless card payments, online purchasing and peer to peer mobile payments. This is a non-exhaustive list but a solid starting point on the common things to do to ensure that your cashless transaction is safe. Some are generic and some are specific tips according to the type of payment method, (Edwards, 2019) and (LoveMoney Staff, 2020):

Some General Tips

Tip 1 – Never provide card details over the phone or through messaging: It is important to understand that no one should ask you for card details such as card number in full, card CVV and card expiry over telephone, email or any other messaging means to conduct a payment on your behalf. This applies for all payment channels not just for card payments.

Tip 2 – Monitor your account: It is always good practice to regularly monitor your bank accounts so that you verify that a transaction is successful, the right amount has been charged and thus have the opportunity to detect anything that has not originated from your side. It is also good practice to store, for at least for a few days, your receipts, even if these are emails, because it would help you to verify and cross check with your account.

Tip 3 – Monitor your communication channels: It is normal that after a purchase you receive an SMS or an email confirming an order or payment. If any communication is received that you deem not to originate from a transaction you carried out, then it is important that this is investigated, and appropriate action be taken.

Figure 1: Contactless Symbol

Some Contactless Card Payments Tips

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Tip 1
– Only the client handles the card: The original intent of contactless payments was to allow the consumer not to leave the card from possession, hence handing over the card to the retailer to conduct a contactless payment defies the whole scope. Moreover, strictly from a hand hygiene point of view when the card leaves your hands to be handled by the retailer’s hand, bacteria, germ or virus transmission is highly probable. One can recognise such cards through the symbol as shown in the picture.

Tip 2 – It is your PIN: When affecting a contactless payment, you may at some point in time be asked for your PIN. It is important to ensure that whilst entering the PIN there is complete privacy and hence no one around you can read the numbers you are inputting.

Some Online Purchasing Tips

Tip 1 – Use strong passwords: Passwords to access online accounts should be strong thus they need to be very long with a combination of numbers, letters both small and capital letters, and certain symbols. Passwords should be non-dictionary like words or anything that is related to the person such as date of birth and not shared across accounts, hence not used for emails and other accounts.

Tip 2 – Your device should be safe: Yes, keeping your device safe and protected is important. This means applying updates available to all software installed, especially security updates. This will ensure that the point of payment departure is safe.

Tip 3 – Use a secure WIFI connection: Using public WIFI to conduct online payments is never advisable. Very often these connections serve a very good purpose to browse the internet and find directions and thus have a good level of security. However, when it comes to financial transactions, the level of security of the internet connection needs to be of complete trust, and one that is not shared.

Tip 4 – Research the retailer and provide the information required only: It is essential that before buying online you ensure that the retailer is trustworthy. Some online sellers especially local ones that can be contacted are easier to verify, whilst others that are not local might be slightly harder to verify. If it is not convincing it is probably safer not to use it. Also it is best to ensure that the website is safe, for example as can be seen below, the website URL should start with “https://” and there should be a padlock that when clicked shows that the connection is secure. Furthermore, the checkout page should not ask you for details that are not relevant to the purchase and nothing else.

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                          Figure 2: Example of HTTPS URL (Source: MITA Portal)

Tip 5 – Verify the emails and communications: Many times, we receive emails with product offers. The legitimate ones are easy to spot as they would come from a trusted retailer, have proper links to view products, do not ask you for personal information, and are well structured. Furthermore, normally these would also come from suppliers that you would have already carried out a transaction with, in the past. In this context one should also be aware of links within emails to ensure that these links are legitimate. A reminder that what can be read is not always what is stored underneath so by way of example one may be reading an email address that looks fine, when in fact it is not.

Tip 6 - When a transaction is complete, log out: It is important that after purchasing one logs out from the account so that no one can use the account again. This is because the accounts often contain saved wallets or profiles and thus by logging out, provided one is using proper strong passwords, there is more safety and protection.

MITA’s Contribution

Without a doubt, the Malta Information Technology Agency (MITA) has always been at the forefront in offering a robust and efficient online payments platform, one that has continued to evolve over the past years. MITA is providing this service to the Government of Malta so that the citizens making use of online Government services that would require payment, can do so with complete peace of mind. The payment gateway offered by MITA, is thus contributing to this preference for a cashless transaction using online payments through cards and certainly the platform will continue to be enhanced to ensure even more uptake by instilling trust that would result in further uptake.

Final Thoughts

A cashless transaction should become the primary choice for both the customer and the seller alike. In doing so, society in general should seek proper ways to manage specific situations such that no one is left out. For example, people who do not have access to such payment methods either due to financial reasons or due to lack of knowledge. Furthermore, cashless transactions heavily rely on the use and availability of the internet and thus, as with anything in life though, one must practice caution to remain safe and protect one’s money.

Despite everything, trends show that the world is moving towards a preference for alternative payment methods and perhaps it is not too far off from seeing complete cashless societies. In fact, a report issued by the Institute of Public Policy Research (IPPR) in the United Kingdom (UK) on the future of cash in the UK earlier this year specifies that the “future will have less cash. By 2028, forecasts suggest that fewer than one in 10 UK consumer payments will be made using cash. The digital revolution in finance will transform our economy and shift the balance of economic power.” (Statham, Rankin, & Sloan, 2020). Who knows perhaps COVID-19 might have fast forwarded the clock in this regard – only time will tell, though time is money; the irony of it!