A person making a card payment by tapping on a square payment machine.

Swipe, tap and touch – what the future of transactions looks like

The days of having a wallet full of ‘pineapples’ and pocket or purse bulging with silver and gold coins are quickly disappearing.

This great liquidation of cash in our economy means that cash payments have almost halved in the years from 2007 to 2016 from 69 percent of transactions to 37 percent of all transactions.

Australia is now the sixth most cashless society in the world.

Consumers have the option to swipe, tap and touch their enabled cards, phones and wearable devices for a quick payment alternative.

A young lady making a cashless payment by tapping her card at the register.

The key contributor to this change in our payment habits is the convenience digital payments offer, along with a growing trust in the technology that enables this new digital touchpoint.

Generation tech

While predictions of a cashless society by 2026 might be greatly exaggerated, its clear Australia is moving more and more towards a reliance on technology when managing finances and making financial transactions.

Changes in our workforce could also see an escalation of this trend.

With Gen Z (those born between 1996 and 2009) entering the workforce and the baby boomer generation exiting the workforce to take up retirement, Australians can expect to see big changes to the workforce – and associated spending habits – over the next few years.

“I think there will be a continual shift over time. And whether it will ever get truly cashless, I don’t know.

“But what we do know is that when generations shift, norms change and trust changes,” says Dr Jeffrey Rotman, Lecturer of Marketing and Consumer Behaviour at Deakin University.

An individual using their mobile to make a payment.

‘Digital natives’, the term Marc Prensky gave to those born after 1980, identifies a cohort of the workforce who have grown up surrounded by digital technology. At the time, the group first identified by Prensky in 2001 had matured into a world filled with video games, mobile phones, the internet and email.

The latest wave of digital natives are growing up in a world that now includes video-on-demand, social media and mixed reality technology. So it’s hardly surprising that they are more open to adopting new technology into their lives.

The lessons from tap-and-go

But with more and more cafes flipping the script from cash-only to cash-less, get ready for this move to affect our bank balances, notes Dr Rotman.

“One interesting aspect is that people do feel that paying cash is a more painful experience than paying with a card through tapping, for example,” he says.

In the 2008 study “Monopoly Money: The Effect of Payment Coupling and Form on Spending Behavior”, researchers found the more transparent the form of payment, the more restrictive the participants were with their spending.

That is to say, cash is harder to part with than credit.

But what does this mean for the newest generation growing up in a cashless (or at least less-cash) society, and how will they learn to manage money as it becomes less about the physical, tangible notes and more about a number on a screen?

A person counting US dollar bills by hand.

“The more abstract you make a concept like money – which is already a little abstract to begin with – the harder it is for a child to really connect that to the real world and real consequences,” says Dr Virginia Weber, Dr Rotman’s colleague in consumer behaviour and Lecturer of Marketing at Deakin.

This has caused some governments around the globe to review their legislation and look at what safety protocols they can put in place to protect young spenders.

One area of concern is in-game purchases within video games.

Belgium banned the practice in 2018 and other European countries are looking closely at banning them too.

“Loot boxes in video games – purchased with real money but with no guarantee they have any value – have been likened to gambling, which has ignited the backlash,” says Dr Weber.

“I think this shows society is catching up.

“It’s just about whether children are being aware, educated and safe from the ills of money and industry.”

Adapting for the future

Rather than relying on legislation, though, Damien Manuel, Director of the Centre for Cyber Security Solutions at Deakin University, sees self-education and building resilience into the technology itself as the way forward.

“I think we’re adapting very quickly without considering the consequence of the technology that we’re adopting.”

“And the trouble is as they become more and more complex, the ability to disrupt those systems becomes easier and easier.

“Unless we build resilience into the system, there will be mass disruption when things do go wrong,” says Manuel.

Until technology solutions are available, though, people will continue to adapt their spending habits to build in this resilience for themselves.

A man entering his card details into his laptop to make an online payment.

“I was travelling overseas and my card was skimmed.

“They started with a small transaction, and then this huge transaction went through and a whole bunch more through Amazon,” says Manuel.

“So now we have a debit card account, which we keep very little money in, and then we have a normal savings account where we keep the majority of our money.

“Every time we want to use the debit card, we have to transfer between the accounts to reduce our exposure if one of our cards is compromised.

“So we’ve had to build those mechanisms in ourselves to protect our money.”

As more and more people have similar experiences, Manual hopes people will find similar ways to protect themselves, and share their tips and tricks with family and friends.

With the pace at which technology is advancing, these types of self-imposed protections will increase along with our need to learn – together – from our experiences.

Are you a Deakin academic with a passion to share your research? You may be interested in writing for us.

Find out more