The evolution and future of how we pay

The evolution and future of how we pay

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With new and innovative ways to pay emerging almost every year, it seems like we've been plagued with figuring out each way to pay. From cash, checks, cards and digital pay. It's hard to know what to use, and what's accepted where.

"First peoples, people were trading beads for meat or leather or any kind of other good that they wanted. That was the form of payment, and it's just progressed from there," Heather Carrasco with Texas Tech Accounting said.

"Currently, people use a lot of different methods," Vickie Hampton with Texas Tech Personal Finance said.

When it comes to buying and selling, most people tend to stick with what they grew up using.

"If you think of my grandparents generation, they use cash. 'Cash is king, and I'm not going to do this credit card thing,' Carrasco said.

Most baby boomers have gotten aboard the credit card train.

"I'm sticking with my credit card. I do have a debit card but I've never used it. Never. I just don't see the point. If I can use a credit card and I've got cash, I can't find the reason to use the debit card."

However, cash has a major flaw.

"There's a security problem in terms of losing cash, cash is gone," Hampton said.

"Not only do you have to trust yourself to not lose the cash, you have to trust the person sitting on the bus next to you to not rob you. You have to trust the person walking behind you to your car to not steal from you," Carrasco said.

So why do we still carry paper bills?

"There's that emotional attachment to money. There's that mental attachment to money. Every degree away from the actual cash you become, psychology tells us we think of money very differently," Carrasco said. 

Cash is still a significant part of commerce as it's accepted universally. Now, hundreds of millions of cards have been activated.

"Debit cards and credit cards are both really convenient and they're both pretty safe," Hampton said.

It started as several different cards for several different stores.

"In the beginning, it was not a MasterCard or a Visa, there was not a card that you could take to a lot of different places," Hampton said.

Now, card companies are at the forefront of the industry. The average American has about three cards each. Whether they're debit or credit cards depends on the person.

"What are you looking for? Are you looking for convenience or security? Are you looking to build a credit rating? Are you looking to keep yourself from getting into credit difficulties?" Hampton said.

At the turn of the century, PayPal emerged as a new way to complete online transactions. It started the digital wallet phenomenon by adding a layer of convenience to e-Commerce.

"PayPal has a well-established system that provided a mechanism to pay online," Hampton said.

"The nice thing with a PayPal is I can ao online and click a button. PayPal has all my information, and I know it's at least safe," Carrasco said.

But how do we know it's safe? Well, PayPal's website is secure and encrypted and hides your account information. Of course, it could get hacked, but it would be tough.

While PayPal is leading the digital payment charge, Apple Pay on your smartphone or Apple Watch and Google Pay have also emerged as frontrunners in the digital wallet marketplace.

"If you're using something that's more secure, that doesn't actually have your credit card information like a PayPal or an Apple Pay or a Google Pay, they get what's considered a 'token,'" Carrasco said.

"Tokenization" makes mobile payments more secure by substituting a series of numbers for sensitive payment details.

"They don't know your name, your address, your zip code. So it's safer for the consumer but at the same time, you're putting all your trust in that one source," Carrasco said.

And that's where using a mobile wallet could come back to bite you.

"Who accepts it? You're always running the risk of it not being accepted by the retailer you're wanting to buy something," Hampton said.

"Not a lot of stores have quite gotten there yet, because they don't have the software, they don't have the technology and it's not free. It's expensive," Carrasco said.

Currently, only 13 percent of adults have a digital wallet set up on their phones, according to a Gallup survey. That's not a statistic that makes retailers want to jump on the bandwagon.

"The U.S. has not tended to be on the forefront of this kind of thing. I mean, we still have a lot of retailers that don't accept chips," Hampton said.

It's a Catch 22. Consumers won't adopt it until retailers do, and retailers won't adopt it until consumers do.

"People are just hesitant to take on something new, try new technology. 'I don't want to be the first one, because what happens when it goes wrong? Now I'm in trouble. I'll wait til somebody else deals with the mess and then I'll come join," Carrasco said.

"People are resistant to change, not in a bad way. But if it's working, why change it, right?" Hampton said.

Of course, you can stick with that cold-hard-cash, or maybe be on the cutting edge and try out the mobile wallets for yourself. For now experts advise picking which payment method works best for you.

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