Contactless Payments Economics Dissertation – Has the Uptake of Innovative Payment Methods affected UK Student Spending Habits? Emphasis on Contactless Payments
This dissertation analyses the current payment landscape in the UK in a period of increased digitisation and use of contactless payment. The aim of this dissertation is to understand how innovative payment instruments like contactless cards and mobile payments, have affected the spending behaviour of students age 18 – 24.
It investigates the rationale for such behaviour and explores the differences that arise when using traditional methods such as cash. Using qualitative semi-structured interviews and questionnaire responses, this study builds on existing research and applies thematic content analysis to identify trends in student spending patterns when exposed to innovative payment methods.
Further illustrated by quantitative regression analysis, the use of contactless payment methods, significantly influenced student spending habits. Common themes apparent from the analysis included a subconscious accumulation of small, impulsive purchases, as well as a reduced sense of guilt when using contactless payments. This was primarily attributed to the theory that in comparison to using cash for payments, contactless transactions are intangible and therefore do not feel like using real or tangible money.
Chapter 1 – Introduction
Chapter 2 – Literature Review
History of contactless payment
Contactless Payment Technology
Mobile Proximity Payment
Adoption of Technology Model
Consumer Payment Choice
The Preference for Innovation
The Transition to a Cashless Society
Student Spending Habits
The Pain of Paying
Chapter 3 – Methodology
Research Style – Qualitative
Semi- Structured Interviews
Quantitative Analysis – Probit Regression
Chapter 4 – Data Analysis and Discussion
Description of Sample
Qualitative results and Descriptive Statistics
The Effect of Contactless Adoption on Spending
Mobile Proximity Payment (MPP Adoption)
Inhibitors to Contactless Adoption
Student Debt Contributors
Implications of a Cashless Society
Awareness of Current Bank Balance
Limitations of the Dissertation
Chapter 5 – Evaluation and Conclusion
According to UK Finance (2020). “We all tend to reach for the payment methods that we are accustomed to using, forming habits over time that can be quite strong. Once we have found a set of payment methods that we are comfortable using and that help us to manage our finances effectively, it can take a great deal for us to change to a different way of doing things. As a result, payment markets have historically tended to evolve slowly. Despite this natural inertia, technological change and significant innovation in payment methods have brought greater choice for people and businesses in how they pay for things.
This has been led by the popularity of the smartphone, which has revolutionised many aspects of modern life in just over a decade. Also, innovations such as contactless payments, mobile wallets, online banking and mobile banking have had a significant impact on the way that we now choose to pay for goods and services and manage our finances. As people have realised the value to them of doing things in a different way, so their payment habits have evolved, resulting in a gradual revolution in payments in the UK.
During 2019, card payments continued to grow as consumers and business increasingly used their cards to pay for things, whether online or in the ‘real world’. This growth saw card payments increase to the point of accounting for over half (51%) of all payments in the UK for the first time. Online and contactless payments continued to act as substantial drivers of this growth, with eight out of ten UK adults using contactless payments in 2019.
Strong growth was also seen in Faster Payments as both businesses and consumers increasingly used online and mobile banking to make payments and to transfer money. Mobile banking in particular continues to grow strongly, and users are continually widening the range of tasks that they perform using such services, exploring beyond checking their balances to also make one-off payments and manage other aspects of their finances” Source: UK Finance. UK PAYMENT MARKETS SUMMARY 2020.
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