The Digitization Of Your Money

The internet has transformed the way we use our money. The digitalization of money has given us, credit cards, debit cards, systems like paypal, e-money and worst of all, a contribution to an increase of debt. Of course some of the things that have come out of this digitalization have been a good thing but on the other hand there are downsides as usual like killing the way people pay with cheques which is being stopped in 2018.

Most people these days will walk around shops today without any money in their pocket or withdraw only the amount of money they will need to purchase the item they desire. It's great for card users because you are not limited by the specific amount of money in your pocket. They are also a great benefit as they have less chance of losing loose money and it also means if you get your wallet stolen, the thief will be able to steal a small amount of cash unless they know how to use debit/credit cards to acquire the information they need to withdraw the money.  Many pose the question, do we spend more with plastic rather than if we had the money in our hand? Personally, I know that I spend more money with my card as I get older. I don't really think about the funds I have in the bank and if I will have enough money to pay that next big bill. Small amounts of money are easier for us to spend than large ones. The larger bill is an after thought.

Art Markman, Ph.D, cognitive scientist at the University of Texas says
"Richard Feinberg explored the link between credit cards and spending in a 1986 article in the Journal of Consumer Research. He varied whether people could see credit card logos while they were making purchases or leaving restaurant tips. People left higher tips and indicated that they would be willing to spend more for products when they could see a credit card logo at the time than if they could not.

In addition, people may pay less attention to prices when they are paying by credit card than when they are paying by cash. For example, the article by Prelec and Simester cites an unpublished study by Dilip Soman suggesting that people are less likely to remember the amount they spent on a purchase when they pay with a credit card than when they pay with cash".


Credit/Debit cards have also transformed the way we shop in the way that we buy and sell things. The internet has enabled anyone to buy anything online from anywhere in the world if you have a card, well you could mail a cheque but that isn't so popular. This has opened up the world to the average consumer who may of had to travel to great lengths to acquire the item they desire before hand. As well as this, company's like Ebay and Amazon which wouldn't actually exist if wasn't for online transactions so it had created a market which was not present before hand. This has increased our debt largely though.
"The typical family debt, excluding mortgages, has increased by 48% to £7,944, equating to just under a third of average annual household take-home income, Aviva's Family Finances report said".
Even though we have been hit with austerity cuts this hasn't slowed down our thirst for the luxury's we want and the figures show it. Although the main contributor making us get into to debt is the soaring prices of services, food and oil making many turn to credit cards with high interests.

The digitalization of money has also created new ways to use money. On the web we now have e-money(electric money) which some company's take advantage of to sell and buy their services. Sites like Ebay do not use normal currency to transfer money between the buyer and seller but use a service called paypal. It eliminates the danger of your details from your cards been stolen as the paypal account has credits in which equal the money you put into it.

"PayPal is a safer, faster, more secure way to pay online – your financial details are never shared. We remember everything for you, safeguarding your bank, credit or debit card details.
You can use PayPal to pay for items on eBay, or at any of the thousands of retailers that accept PayPal".

Online shopping though great, also opens the door for opportunists who seek to steal your credit/debit card. Some hackers create phishing sites which are sites which look like the legitimate site you wanted to visit. For example you may want to visit your bank online and click on  an email your receive, unbeknown to you it a fake site waiting for you to enter your card details. So the invention of the credit card has opened up new ways for people to steal your money. They also make them for sites like paypal so that isn't really safe either. This is not to say though that email providers are not stepping up to protect you. They now have phishing detectors which will notify you of any scams. Total fraud losses on UK debit and credit cards fell by 28% between 2008 and 2009 to £440.3 million says the BBC.