Paying Cash May Cost Americans More Than They Realize
A recent New York Times article "Newly Wary, Shoppers Trust Cash" highlighted a rather troubling trend for those of us in the payments industry: Americans making a conscious effort to use cash instead of credit cards. The catalyst for this paradigm shift isn’t a need to conserve funds or avoid finance charges, as you might expect. Instead, these consumers are choosing cash over plastic to avoid becoming future fraud victims.
With steady news coverage of data breaches and other fraud, it makes perfect sense that consumers are feeling a bit tender. But the New York Times article gave me pause. Perhaps we, as an industry, have not done a good enough job of instilling trust with consumers. Let’s face it, carrying large amounts of cash is not necessarily safe, nor is it convenient. And using credit responsibly is a smart way to build a credit history, which would benefit consumers in multiple ways over the long run.
My colleague TJ Horan recently blogged about consumers wanting payment systems that are frictionless and secure. There’s a powerful message here, and it’s coming from the customer!
So how do we build trust back into the equation? How do we encourage cardholders to reach for their payment cards with renewed confidence? Here are a few ideas:
- Crow about your security practices. The days of discreetly operating a top-shelf fraud department are somewhat over. Make consumers aware that you are fighting the good fight and using the very best tools in the marketplace. You don’t have to give up trade secrets to reassure your current and future customers on how safe they truly are. And as part of this communications, you should…
- Show that you plan for the worst. For instance, your website should have a “safety and security” section that features information about what customers can expect should they fall prey to some form of financial crime. Include how you plan to share important information, including your choice of communication channel like email, phone or US mail.
- Focus on consumer education. Many consumers think that a decent credit score is maintained simply by having available credit. They don’t know or may forget about the importance of using credit regularly and responsibility to establish an adequate credit history. Educate your cardholders on smart credit behaviors and how these can affect their credit scores.
- Use loyalty programs and other incentives. Contests and giveaways based on card usage are truly great ways to inject new life into any card program. Incentives work, and it’s also another great way to build ongoing customer relationships.
If you have additional ideas, please share them in our comments section!
Customers are constantly discriminating between safety, convenience and quality in the marketplace. It's our job to find a way to deliver on all of these components whenever possible.