Consumers may spend more when making contactless payments

There has been a lot of effort on the part of a number of companies in recent months to develop and promote contactless payment platforms that allow consumers to make purchases without swiping their credit cards. However, this may lead to higher spending for borrowers.

Within the first 12 months of a person making their first transaction using a contactless payment system, spending on that account may rise nearly 30 percent, according to a new study from MasterCard Advisers. However, consumers seem to enjoy having this new type of technology available to them, as using it also significantly increased their preference for using a particular account.

The study was conducted using MasterCard's PayPass system, which uses swipeless credit cards, the report said. In addition, it took into account cardholders in three different groups, those who spent low, medium and high amounts of money on their cards every month, and the 30 percent increase in spending was consistent across all three groups regardless of how much they spent prior to adoption.

"In our highest spend segment, this lift translates into approximately $600 per month in incremental spend," said Jonathan Orndorff, the principal at MasterCard Advisors who led the study lead. "Increases like this can have a significant impact on the issuer business case for contactless."

Increases in other areas

However, spending increases were noted in other types of spending as well, regardless of whether the further transactions used the wireless technology the program provided, the report said. In addition to the 30 percent increase in contactless spending, consumers also saw significant spikes in the use of these accounts for recurring payments, such as using the card to automatically pay bills every month. However, this was more dependent upon the spend segments prior to adoption, as increases ranged from 11.8 percent to 28.5 percent.

Further, spending for e-commerce rose between 8.8 and 33.3 percent depending upon previous card use habits, the report said. Finally, researchers also noticed increases between 53.1 and 79.1 percent in cross-border spending on these accounts.

The trend seems to be a vindication of those who said that the only reason consumers would be hesitant to adopt this type of contactless technology was fear over the security of such a system. While this largely refers to the use of credit card accounts in near-field communications-enabled mobile wallet systems, this study may show a trend toward eager use of new payment platforms once they are adopted. In addition, experts note that wireless payment systems of any kind are likely more secure than traditional credit cards because of the way the new technology protects account data.

Consumers who are concerned about the safety of their finances may also want to take the time to check their credit reports regularly. Doing so may help them to identify any unfair markings that can have an adverse effect on their credit ratings, and if any are spotted, working with a credit repair company can help them to clear up these concerns.