Incredible New Finance Technology

Cash used to be a strictly physical commodity. People counted it, carried it in their pockets and hid it under their mattresses. But as technology digitizes both our cash and our transactions, money is increasingly becoming more intangible. Check out some of the technologies that are working to shape the way we shop, save and invest.
Contactless Credit Cards

As if using a credit card to pay for things you may not be able to afford doesn’t already create a wall between you and your finances, now contactless credit cards have been thrown into the mix.

This new wave of credit cards allows you to pay for items just by waving your card in front of the reader–there’s no need to insert, swipe or enter a PIN number. Visa, MasterCard and Discover all have systems that support contactless payment, and the option is becoming increasingly common, particularly in the U.K.

However, although these cards pose risk to consumers if they are stolen, they have built-in security features, including a PIN requirement for larger transactions, and a very short (2 inches) range that prevents fraudsters from intercepting sensitive information.
The Virtual Wallet

A virtual wallet is a software application (app) that is generally used on mobile phones and is designed to replace the functionality of a physical wallet by storing all the payment information that would be contained therein.

A virtual wallet stores information about your credit cards, bank cards, coupons and credit card rewards points. In the case of more advanced applications, such as Google Wallet, this functionality can be combined with near field communication technology, which may be found on select smartphones. This allows users to purchase items by tapping the smartphone against an NFC reader.

Such readers can currently be found at 150,000 merchants across the United States. In the future, this functionality may also allow users to exchange funds by bumping two smartphones together.
Cryptocurrency

So far, we’ve discussed some digital payment methods, but cryptocurrency is a digital currency that does not and cannot exist in physical form. This type of currency is essentially made up of a block of encrypted data, which can be transferred as a form of currency online.

In the case of Bitcoin, a fully-functioning cryptocurrency, it can even be traded as a commodity. Proponents of Bitcoin herald the fact that this currency is not controlled by a central bank, and is therefore, not subject to its inflationary whims. Because a limited number of Bitcoins are produced, this currency’s value is based on market forces, allowing owners to trade it over the Bitcoin StackExchange.

Bitcoins are transferred through secure peer-to-peer file transfer and have so far been used for some online transactions. However, because Bitcoin transfers are anonymous and untraceable, its use has also been associated with illegal and black market activities. Whether Bitcoin can function as a viable currency for consumers remains to be seen.
QR Codes

You may be somewhat familiar with QR codes, which look something like a TV with poor reception, or perhaps an alien landing pad. In fact, these pixilated, black and white squares are a type of bar code that can be read by a smartphone.

QR codes are often used to link users to a website and to interact with the user through the phone’s hardware, such as by updating the smartphone’s calendar to include an advertised event. The technology has also recently been employed as a convenient payment method.

For example, in London drivers can scan a QR code upon entering a parking garage and will be prompted to enter payment information through their mobile phones. Although QR codes are not yet widely used in the United States, many experts believe that we will be seeing more and more of these strange images on everything from business cards to cereal boxes.
Digital Money and You

As the way we save and spend money become increasingly digitized, it’s more important than ever to keep a close eye on your credit card and bank balances. Not only does paying digitally make it harder to keep track of how much you’ve spent or charged, it also opens up new avenues through which thieves may gain access to your banking information.

So, while convenience is the biggest perk of new financial technologies, it’s important you don’t allow them to become so convenient that you neglect to manage your own financial affairs.