Consumer Reports: New Technologies Make Living Cashless a Reality, but that Convenience Comes with Trade Offs

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CR looks at privacy, security and marketplace fairness; weighs pros and cons of digital dollars

New technologies are making the convenience of living cash free a reality, but the benefits can come with a number of potential security and privacy tradeoffs, according to Consumer Reports in its latest story that weighs the pros and cons of cashless wallets and other forms of mobile money.

In its story, "Cashing Out," CR noted that while all consumers are wading into some type of mobile payments technology, research from a May 2015 Federal Reserve Board survey showed that younger ones are going all-in sooner; 34 percent of those ages 18 to 29 are now using mobile payments vs. only 16 percent of consumers ages 45 to 59, and 7 percent of those 60 and older.

Smartphones and other electronic devices are a huge part of this new era of payments. Digital transactions introduce new benefits but also potentially some worrisome consequences, from privacy concerns to worries about overspending. Mobile money options include: mobile wallets like Apple Pay; person-to-person (P2P) payments that allow one person to send money to another person via a mobile app, email, or text; branded payment apps that allow purchases only at the merchant brand’s physical stores and service providers, and their online counterparts; and electronic toll tags, which allow payment for highway, express lane, bridge, and tunnel tolls, as well as parking at some airports.

“When you combine the amount of money Americans spend using old-fashioned credit cards with all their spending using the newer payment options, including mobile wallets and store-branded payment apps, the amount of cash that changes hands has reached an all-time low in this country, just 14 percent of all expenditures,” says Margot Gilman, Consumer Reports Money Content Development Team Leader.

Today, completing a transaction can be as easy as touching the screen of your phone with your fingertip. Further advances in cashless technologies, such as paying with only your fingerprint, are in the works to make it easier and safer for consumers to handle and access their finances.

CR weighs the pros and cons in the four key areas below to determine if going cash-free is a viable choice. A full list of pros and cons is available at

  • Pro: When you owe money to a friend, P2P payment apps eliminate the chore of writing a check or running to the ATM to make a withdrawal.
  • Con: Fees are not so transparent because banks charge merchants for each cashless transaction, and merchants ultimately pass on those added costs to consumers in the form of higher prices, says Mallory Duncan, general counsel at the National Retail Federation trade group.


  • Pro: Because mobile payments typically rely on credit and debit cards, the transactions for mobile are covered by the same small- to zero-loss liability consumer protections that the underlying plastic card have. Mobile technology also secures transactions as well as—or sometimes better than—credit and debit cards alone.
  • Con: Cybercriminals are relentless, and the digitization of dollars can put you at risk of hackers looking to find and exploit security weaknesses.


  • Pro: The already digitized transaction data can serve as the necessary raw material for household budgeting and money management software.
  • Con: Trail of mobile payments info can reveal lots about us that we may not want others to know. Mix that with other data that can be gleaned from a smartphone, search engines, and other sources, and mobile payment companies can see you in even greater detail.

Marketplace Fairness:

  • Pro: Mobile banking and payments can help underserved consumers gain access to mainstream financial services. About 34 million low-income consumers have little or no access to traditional banking services and wind up paying the most to use their own money. The U.S. Postal Service inspector general estimates that those consumers spend more than $2,400 per year in interest and fees on high-priced alternative financial services.
  • Con: Low-income consumers worry about transacting financial business via smartphone, in part because they don’t have the financial cushion necessary to handle even temporary loss of access to their funds due to fraud. Fear over loss or theft of their phone is another concern.

The cashless society story is published in the November issue of Consumer Reports and available free online at You can also see a field guide to mobile money to explore all the options to easy, cashless transactions.

About Consumer Reports
Consumer Reports is the world’s largest and most trusted nonprofit consumer organization, working to improve the lives of consumers by driving marketplace change. Founded in 1936, Consumer Reports has achieved substantial gains for consumers on food and product safety, financial reform, health reform, and many other issues. The organization has advanced important policies to prohibit predatory lending practices, combat dangerous toxins in food, and cut hospital-acquired infections. Consumer Reports tests and rates thousands of products and services in its 50-plus labs, state-of-the-art auto test center, and consumer research center. It also works to enact pro-consumer laws and regulations in Washington, D.C., in statehouses, and in the marketplace. An independent nonprofit, Consumer Reports accepts no advertising, payment, or other support from the companies that create the products it evaluates.
© 2016 Consumer Reports. The material above is intended for legitimate news entities only; it may not be used for advertising or promotional purposes. Consumer Reports® is an expert, independent nonprofit organization whose mission is to work for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves. We accept no advertising and pay for all the products we test. We are not beholden to any commercial interest. Our income is derived from the sale of Consumer Reports®,® and our other publications and information products, services, fees, and noncommercial contributions and grants. Our Ratings and reports are intended solely for the use of our readers. Neither the Ratings nor the reports may be used in advertising or for any other commercial purpose without our permission. Consumer Reports will take all steps open to it to prevent commercial use of its materials, its name, or the name of Consumer Reports®.

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Rocio Guzman
Consumers Union
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