The rise of alternative payment methods, innovative e-commerce and even new digital currencies are changing the way people look at their wallets and bank accounts. Tech giants such as Google and PayPal are leading the charge in this regard, and financial institutions such as Citigroup and American Express are playing catch-up. The financial stakes are high; even if these electronic payment and digital currency providers collect pennies on each transaction, the profit potential could be multiplied by millions of users around the world.
A recent study published by American Express shows that many consumers in the United States are excited about these new personal finance technologies, particularly those who were born in the late 20th century. Security is still the greatest concern among Americans when it comes to entrusting a business entity with their hard-earned cash, but it is interesting to see how our personal attitudes are shaping the way we manage money. American Express classified three distinct wallet personalities in its study:
The Electronic Wallet
These are not fancy leather wallets or pocketbooks; they are digital wallets carried by tech-savvy consumers who know their way around smartphones and mobile apps. These wallets may carry cash in various international currencies, including the revolutionary peer-to-peer (P2P) cryptographic Bitcoin digital currency. These wallets often feature personal financial tools that let consumers track their spending and even contact their banks for customer service. Electronic wallet users may also carry a physical credit card just in case.
The Budget-Conscious Wallet
These wallets will definitely have cash inside, but not too much. More than half of consumers who carry skinny wallets will also carry a debit card, but rarely a credit card. These penny-pinching consumers feel that they can control their spending better with a set amount of cash, but they are more open to the idea of electronic wallets due to their expense tracking and budgeting tools. Transitioning to electronic payments will not be difficult for these consumers as long as they can deposit minimum amounts they can control to prepaid accounts.
The Worrywart Wallet
The most conservative of all wallets carries a mix of credit and debit cards, and maybe even an old-fashioned checkbook. Consumers who are concerned about how electronic payment providers handle their funds are not likely to adopt electronic wallets soon, although an ultra-secure cryptographic P2P system like Bitcoin might appeal to their vexation. Tech companies like Google will have a hard time trying to replace worrywart wallets, but established financial firms like American Express may be able to sell them on electronic wallets.