Personal Finance presentation, digital payments, prepare to get financially fit by practicing personal finance, we’re going to start off with a list of digital payments. And then we’ll go through some of those items in more detail including the debit card transactions, cryptocurrency, wallet, mobile payment apps, which could be called the digital wallet, and the store value cards or the gift cards. Now some of these might be fairly familiar, such as the debit cards, and the gift cards, some of them might be more abstract, such as the cryptocurrency and the mobile payments.
00:35
And this list doesn’t include everything possibly that could be used for the digital payments. Note that when we think about our finances, in general, the budgeting and our payment plan, the actual form of the payment shouldn’t impact too much our actual plan of how much we’re going to spend, and so on and so forth. But we do know that the digital payments can be somewhat confusing, because there’s so many options in different formats of payments available these days. So we want to touch on it for that reason.
01:04
And also, of course, it can make the payment options more convenient. Once we come up with a plan, we can then decide how we’re going to basically make our payments to save our money, and save our time as we go through our daily payments. So let’s take a look at these we’re gonna start off with the debit card, which we’ve seen in the past, we’ll do this fairly. Basically, we just want to keep in mind the differences between the debit card and the credit card, I’ve removed the need to carry cash or physical checks to make purchases.
01:31
The debit cards can also be used at ATMs to withdraw cash, noting that the debit card is going to be taking money and it’s connected to our bank account. Generally, unless it’s a prepaid debit card, which already has money in it has that fixed amount in it. So we can take money then out of the checking accounts directly, they generally have daily purchase limits. In other words, it may not be possible to make especially large purchase with one. So you might have a debit card.
01:58
And when you go to the ATM, you might have a limit as to how much money you could take out of there and possibly how much money you can use a debit card to make a purchase transaction of some purchases can usually be made with or without a personal identification number, so you typically need the pin. In order to draw money from the ATM, you may or may not need it when you make purchases elsewhere elsewhere.
02:20
Or you may be charged an ATM transaction fee when using a debit card to withdraw cash from an ATM that is not affiliated with the bank that issued your card. So obviously, if you’re in a bank, other than an ATM other than the one associated with your bank, you could have a fee related to it. Some debit cards offer reward programs in a similar similar way as credit card reward programs.
02:44
Let’s go to the cryptocurrency wallet, I want to touch on quipped cryptocurrency here because it is a topic that can be confusing and impacts a couple different areas of our finances, which we can take a look at, it can also be a little bit confusing as we think about other options of payments that take place. So one confusion with related ration to the cryptocurrencies is there’s really two types of things that it might be used for one, it might be used for a store of value for investment purposes. And the other is it could be used for for spending.
03:16
So you can spend it and use it as this digital spending kind of item that you could be taking place at this point. Now note that at this point, and especially for the Bitcoin seems to be the item that’s going to be mostly used at this time, for the store of value, people are putting money into something like Bitcoin as another type of investment to see an increase in the investments and possibly as a hedge from other things such as the currency going down, hopefully, because the Bitcoin is not is not related, in essence to the government, it has a different kind of has a hedge against there being a problem, especially even with the currency or other kinds of things, the traditional hedge for that type of thing would be gold.
03:57
And this would be another option. Now, there’s arguments as to whether that’s a good plan or a bad plan, or you know, and we’ll maybe talk about that later, that doesn’t really belong here in this discussion, because we’re thinking about the other use of it, which would be the use of it for payment. So it might take a look at more of that component in the future.
04:14
The other thing that can be used for is to have this kind of transparent payment system that would be utilizing the blockchain and that could be quite useful it especially if you’re dealing with like a platform or something like that, that is usually utilizing the, the the blockchain in order to help make payments or some types of things like that with the use of the cryptocurrency and they possibly could give rewards in a digital fashion. And the fact that it’s on the blockchain could add a level of transparency for those types of transactions. So what if that happens,
04:48
then of course you can you can use the blockchain to make digital transactions quite quickly. Now if you’re making normal day to day transactions with something like cryptocurrency, it becomes more difficult At this point in time, because the currency is not quite as standardized and the value of the currency is going up and down, as there’s fluctuations in the market, as it changes,
05:10
we’ll see if it if it becomes less volatile over time, the fact that it goes up and down means that it’s more difficult to use as basically a payment method, because it’s hard to know exactly what the value of it is at a specific point in time. So to pay your normal bills with it, at this point, might be a little bit more difficult. Hopefully, if they do some of this neat stuff with a blockchain and have platforms that give rewards and whatnot, they can utilize it on those fashions, and we’ll see if it kind of evens out over time in terms of a fluctuation of value to have a more stable value, which means it might be another another one of these methods that we can use in order to to make payment.
05:50
So right now, at this point in time, I wouldn’t think of it as the primary thing that you use to make digital payments. But as something of a store of value. And in the future, as things level out, maybe it could be used more for like making payments and also to be kind of driving some of these platforms that they might be using on the blockchain. So that’s my quick recap at this point. So maybe called the Bitcoin wallet or the crypto wallet could be used kind of a store the value holds proof of your digital cash.
06:21
So stores the public and private keys required to buy bitcoin or other cryptocurrency and provides digital signatures authorized each transaction can be a device, a program, or an app on online website, or a service offered by the crypto exchanges. This is the cryptocurrency wallet. So you would need the wallet in order to get access to to the to the spending and receiving funds and whatnot. So you will need to keep safe and secure your private key that allows you to unlike your crypto wallet, so again, we might talk more about that in the future.
06:52
And it’s different kind of methods in the future. It’s not what I would think of as the normal kind of payment options and your normal basically day to day, which is where our focus is right now, then we have other kinds of these apps that could help you to make payments. The next question is well, is the application that I’m using actually from my institution, which you would think would be that would be where you apps would be meaning if I have an institution of a big bank, like a Bank of America, or Wells Fargo? Do they have their own apps that facilitate my ability to make payments, say with a phone or something like that? Or do we have these other apps?
07:29
So that’s the next kind of categories, I would put think about these things in? In other words, if I’m if I’m using, say, my phone or something like that to make payments, am I doing that through an application that’s from my financial institution, like my bank, if I have a big bank, like a Wells Fargo, or Bank of America, or is there some third party app that’s having me connected to my bank or my credit card that is helping me to facilitate the transactions, which you would think would have one more level of problem because we’re possible security risk, because you got one more level of item that’s going to be involved in there.
08:08
Obviously, when you think about the banks themselves, it becomes more difficult for them to have the apps that are going to interplay with other banks that are not the same bank. So that’s why one of the hurdles, they have to make their own apps that would allow you to make payments directly to other people in this kind of thing. So those are the two categories you might think about, if you’re talking about your bank, if you’re banking out as a large institution, and this would probably be one of the differences between something like a credit union maybe might not have as many options as a big bank,
08:38
you would think a big bank might have the ability to make deposits, say with an application on the phone or something like that, which you would think that would be the actual banks application that allows you to then to, you know, to make deposits, then to that institution, is how I would understand that pay for merchandise. So they might So do they have the ability to make payments with the merchandise on a digital transfer, and then transfer money to friends? Do they have the app? So I would think about these kinds of apps? Are you talking about an app with your bank? That is allowing you to transfer money to friends?
09:12
And if so, are you restricted to people that are in that same institution? Or are you able to transfer money to other institutions, and then of course find an ATM, they might have apps that allow you to find an ATM that is related to that to that institution. And then we have mobile payment apps, which you might call digital wallets and when I hear the term digital wallet, sometimes that makes me think of the cryptocurrency because that’s similar to the term that you use basically to hold on to the cryptocurrency and so on and so forth.
09:41
We’re not talking about cryptocurrency here, we’re talking about so we’re not talking Bitcoin or anything like that now, we’re just talking about normal kind of payments. Using now apps. These are not apps that are from the financial institution, meaning if you bank at a large bank, like a Wells Fargo or your bank, and that bank of America, we’re not talking about an app that’s basically from the institution designed specifically for them, but designed by large companies, typically the phone, owners of the phone. And then you would have to connect them generally to your bank in order to use them. So you got that extra kind of detail, we’re now you’re on your phone,
10:20
and you’re and you’re connecting to the bank, which means you have to use the app from the mobile device to connect to the bank, which might add another level of security, which is somewhat, you know, there’s debate in terms of how secure if you’re using your phone for these kind of payments, so you want to do your research on that. But these are the apps that you would expect them to be basically, and they would kind of be driven by your phone, I would expect, right you get if you have an Apple phone, you might be using Apple Pay.
10:46
If you have another phone, you might be using the Google pay. And if you have a Samsung Samsung Pay, you may also have PayPal, which we’ve talked about in the past, which is another kind of a third party kind of institution, which isn’t generally your bank in and of itself, although they are providing more banking services these days, that might connect to your banking institution or your credit card institution, I usually think of PayPal as something that I don’t make my day to day transactions with a phone with, although I believe you could basically do that.
11:17
Now I usually, I think of PayPal as something to drive your transactions, if you’re if you’re invoicing someone on a business standpoint, or if you use a website, although, again, they’re expanding their ability on these types of things as well. So we’ll see where all this kind of plays out, you want to keep an eye on the security, how secure is the phone versus your computer, and which of these applications are going to be able to do the phone and the security best, and then we got them know as well.
11:45
And one hate to leave any of them out. Now I’m going to focus in on Google pay, just to give an idea of what it does. Now, this isn’t an advertisement for Google pay or saying it’s better than the others. But this is an idea of what these kind of things would do. And I’m thinking more of the idea of using your phone to basically make payments. So you’re using the phone to actually scan and kind of make the payments, meaning you’re going to use Google pay to generally connect to your bank, in essence, and then that’s going to help you to to make the payment and do some other things. So this is just from Google, and you would think they have similar services for the other.
12:21
For the other wallets, digital wallet type of things here, I’m not advertising one of them versus the other just to give you a general idea of what they can do. So pay out your favorite places. So you might be able to use them to pay if you’d like to use your phone, to make the payments, send and receive money instantly earn rewards for everyday payments. So they may have some kind of reward program that you can compare to say your credit card or something like that, if it’s if that’s a significant incentive for you understand your spending and improve your financial health. They’re saying that they can track this and using the tracking information.
12:55
Obviously, that would be nice. I don’t think that that removes the need to track, you know, use other apps to do your budgeting and whatnot that we’ve talked about in prior presentation. So you can transfer money, they’re saying, transfer money to friends and family. So you would think to make this happen, unlike the bake, because you’re using a third party app, if you’re using a baking app, you would think the obstacle they have if it was like be of a app that you’re at, or Wells Fargo, that the other person that you’re doing business with would need the same app, usually. And if they’re not baking at your institution, then the question is, do you know?
13:33
Are you going to how are you going to transfer money to them? If they don’t have the same thing? If you use the phones, because they’re so big right these days, then you would think that if they have the same kind of app, meaning if your friend had Google pay, you would think then maybe that you can transfer now the problem here is of course, that what if they have a different phone and they got the iPhone and you got the Google phone or something, then that’s the question, right?
13:57
And there’s a question as to when you think about what’s going to happen in the future is what is this a monopoly kind of business is one of these business going to go to win and be the standard bearer or something like that you don’t know. But in any case, you would think that the Google pay more people would have it, then say the banking app. And I believe that would be necessary for you to basically make transfers to to friends using that platform, which would be connected to your bank. So create a group to send and receive money for things like trips, dinners, bills, rent and more.
14:28
So that’s another when you do your budgeting, I’m not sure these these apps would change your your overall goal for your planning on how much you spend, but they can be nice and convenient to help you to make these groups so that if you do things and you like to do things in a group fashion, you always have that problem of, you know, how do we split the bill and we don’t have people you know, you know, I don’t want to feel taken advantage of or feel that I’m not paying my share when I’m in a big group of people and I have no idea you don’t like these kinds of things can help you to kind of split Get up those bills and track track who was there.
15:03
And, and sort that kind of stuff out. So that’s kind of nice. So Google pay will help you do the math on on who owes what. So that can be useful. I would believe in those group settings, many transfers are instant and free with Google pay, Google pay money management, see balance from from all eligible accounts. So they might be able to pull in, like other software we looked at in the past to give you that ending balance kind of thing, which might help you to put together in essence of financial statement budget, I’m not, I’m not sure that would be the most effective tool for that, I don’t think I would necessarily want to do that on my phone.
15:37
Because I’d rather if I was doing that kind of planning, I might want to do that on my, you know, somewhere, you know, somewhere on a computer where I’m sitting down on it personally. But you know, if you’re in a case, get reminders about incoming bill payments, so you might be able to set it up. So it actually gives you that reminder information, which would be fairly standard. If you’re talking about bill payments software, where you’re setting up auto pay bill, I get weekly summaries and spending and see trends over time.
16:05
So they might give you some trend reports, which again, I would think that would be similar to other kinds of payments, like a credit card or something like that, where you could track your spending, which is great. But no matter what you do with that kind of stuff, you’re still gonna have to group it some way into a budget, like an income statement by what you spent it on, so that you can actually make decisions on that kind of information.
16:27
And then we have the store value cards or gift cards. So these are usually fairly familiar to most people, you got the gift card, which is basically like a prepaid debit card, which will have that fixed amount on it, it functions like a debit cards as specific to the certain retailers or set of retailers. Also note that I have seen people using these prepaid cards, which are like debit cards, but you have the prepayment on it. And that could could be a good tool from a budgeting standpoint, in that you can you can basically put some money on it and say that I’m not going to spend any more than I put on this debit card. And that could be so that you could say that, you know,
17:04
I’m going out with this debit card. And that’s it right and but the problem with that, of course is that is that you might have to pay for fees to put money into the into the debit card, the prepaid debit card.
17:16
So so it might be something that depends those fees might be going down over time, if you have a reusable debit card that you want to transfer money in, and say I can only use this much or possibly give it to someone else, that they can only use this much money, they got so much money on a debit card, if you’re given somebody like you know, you can spend this much money and you have authority over their budget, and you give them a debit card with $20 on it instead of a $20 bill, then that can be useful if they can lower the fees in order to set up the debit card and gift cards.
17:47
So there are two main types of store value cards you got the closed loop and the open loop. So while closed loop cards can only be prepaid and use one time open loop cards may be reloaded with funds and use continuously. So those are the differences between those kind of cards.
18:03
One card once it’s done, once it’s out, its out the other card, you can basically reload and again, if you’re using it as a budget kind of thing. It might be nice to have the reloadable card so you don’t have to spend down to the last penny of the card and you can reload it and say you know I spent it down to 50 cents is left on the card or whatever. And then you can possibly reload the card but again, be aware of the fees that might be involved with that sounds attractive