+
THE UNIVERSITY DAILY KANSAN
MONDAY, JANUARY 20, 2014
PAGE 3A
+
FINANCES
Convenience of cards bring certain consumer risks
CODY KUIPER news@kansan.com
When Bryn Johnson reaches into his wallet to pay for something, chances are he's grabbing plastic, not paper.
"I don't feel comfortable carrying cash on me," Johnson, a sophomore from Topeka, said. "If I got robbed and my debit card got stolen, I could just give the bank a call and say 'Hey, can you cancel this credit card,' and my money is safe. Whereas if you carry cash people can just take that and they suddenly have all your money"
Wu said the shift from using cash and checks in transactions can be beneficial to a lot of businesses who no longer need to pay the potential cost of physically shipping a check around the country. He also added that a move toward
to using those I think, so older generations still use cash or personal checks"
Johnson is not alone in his decision to keep his cash out of his wallet. According to Javelin Strategy & Research, only 27 percent of all retail sales were made with cash, and that number is expected to fall to 23 percent by 2017.
shoppers.
This trend of not using cash is particularly evident among younger generations as well. The Mercator Advisory Group found in a recent survey that young adults are more likely than other demographics to use debit cards, prepaid credit cards and forms of mobile payments.
Professor Shu Wu, an associate professor of economics at the University of Kansas, said it's not surprising that young adults would be more attracted to forms of payment other than cash.
"This might be some kind of passive impact on people's propensity to consume," Wu said. "When people's actions are decreased, it would encourage consumer activity and it would make it more prosperous for businesses, but people might spend money on things they don't really need
"People are always going to use the most convenient and least expensive means," Wu said. "But there's some sort of learning curve when it comes
"Think about the time you spend traveling back and forth from the ATM to the grocery store. That adds up."
SHU WU
Associate Professor of Economics
more debit and credit card use can prove to be rewarding for consumers as well.
"Think about the time you spend traveling back and forth from the ATM to the grocery store. That adds up," Wu said. "People are going to use new forms of technology as you make them, and if it's a positive thing that reduces the transaction cost it's good for both businesses and consumers."
There's another side to the coin when it comes to debit and credit card use, however. In some cases, it can hurt the consumer more than it helps. In a 2011 study from the Journal of Consumer Research, a team of economists found that consumers who use debit and credit cards are more apt to make indulgent and spontaneous purchases. Wu says this side effect can help business, but it can potentially hurt
Johnson added that his decision to not carry cash often means he needs to pay more attention to his bank account.
because they have that access to savings."
"Before I actually got a debit card, I almost never spent money," Johnson said. "But these days if it's below a certain dollar amount I don't even realize I'm spending money. I constantly need to be aware of how much I'm spending, because one has an infinite amount."
Those who turn to cash more than credit may have had their choice validated over this holiday season when a data breach at Target exposed millions of shopper's credit card information. The Secret Service said hackers installed malware to steal the information on 40,000 of the retail chain's credit card machines throughout the country.
affecting as many as 110 million shoppers.
Despite its affect on consumer spending habits, card use isn't always preferred by some businesses. Aaron Marabel, who has been a clerk at Love Garden Sounds on 8th and Massachusetts streets for 10 years, says sometimes small businesses would rather shopers leave their cards at home. The music store requires transactions to be at least $5 if a customer would like to pay with a card in order to compensate for the percentage credit companies take per transaction.
"Sometimes I ask people simply if they wouldn't mind getting cash if it's below a certain amount or buying another item to bump it up, just because credit card companies are taking a cut every swipe," Marabel said. "That's why small businesses benefit from cash or check sometimes."
Nevertheless, Marabel says his desire for shoppers to use cash doesn't mean he doesn't cater to the store's young shoppers' desire to swipe their cards.
"I run this credit card machine all day, every day, and I don't know how you would stay in business if you didn't," Marabel said. "Cash is king, but I recognize these are modern times and I don't want to make people feel alienated."
Edited by Katie Gilbaugh
PHOTO ILLUSTRATION BY BRENT BURFORD/KANSAN Young adults are increasingly choosing to carry cards over cash.
What's in your wallet?
Only 27 percent of all retail sales are made with cash.
Young adults are more likely than other demographics to use debit cards and prepaid credit cards and forms of mobile payments
Consumers who use debit cards are more likely to make indulgent and spontaneous purchases.
Follow @KansanNews on Twitter for up to date campus news
+