Alternative payment methods can you use instead of cash.

Alternative payment methods to cash that simplify your life

Tired of digging around for small change at the check-out? Find out how these alternative payment methods to cash can make your daily life much easier.

6 min read

If you often find yourself digging around for small change at the check-out, yet the idea of paying with your smartphone seems daunting, don't panic – going cashless is easier than you think! Find out what alternative payment methods are available to you, and discover how they can make your daily life much easier.

Credit cards, debit cards, prepaid cards, bancomats... what's the difference?

When it comes to alternatives to cash, the first thing that comes to mind is probably a bank card. Whether it's credit cards, debit cards, prepaid cards or bancomats, these allow you to quickly make purchases and payments without having to carry large amounts of cash in your pocket. But, as credit and debit cards, prepaid cards and bancomats have many things in common – such as an expiration date, a card number and a payment circuit such as Mastercard or Visa – how can you tell the difference between them?

Well, let's start with debit cards. This type of card allows you to make transactions with the money available in your account. This means that all the payments you make are automatically deducted from your bank account so you can’t spend more money than you’ve deposited in it. Instant debit cards are the cheapest on the market, and also the most popular – regardless of your budget, they are perfect for managing your daily expenses. As for taking money out, debit card withdrawals are generally free of charge at every ATM belonging to the bank's network. With the N26 debit Mastercard, you also get free withdrawals from any ATM.

Now let’s turn to credit cards. First appearing in Anglo-Saxon countries, they’re very different from debit cards and work like this: every time you pay by credit card, the amount isn’t charged immediately. Instead, your bank takes care of these expenses (granting you “credit”) and asks you to pay them back at fixed deadlines, usually once a month. This way, your credit is renewed for the following month. You can use credit cards for any kind of payments or transactions, just like with a debit card. However, for every ATM withdrawal with a credit card, you’ll be charged a fee. On top of this, when using your credit card, you should always keep an eye on how much you’re spending in general – this is because if your balance becomes negative, you’ll have to pay a fee and some interest to your bank. And remember, credit cards also often have yearly management fees.

So, what about prepaid cards? These cards let you to do all the basic banking transactions – such as withdrawals, transfers and card payments – without necessarily being linked to a bank account. How? Basically, the payment provider sets up an electronic wallet with an online account, also known as a “bankless account.” In order to use a prepaid card, you need to put money in it first. Only then will you be able to spend the amount that’s available on the card. Once the money is spent, the prepaid card must be reloaded. It’s important to note that most prepaid cards have a limit on withdrawals, top-ups or annual payments, which vary from bank to bank. If these limits are too low, they can make it difficult to use your prepaid card for your day-to-day transactions.

And finally... what is a bancomat? And why is it different from a debit card? The answer might surprise you because bancomats and debit cards are, in fact... the same thing. Although a bancomat is a term that’s commonly used to refer to this type of card, and to ATMs when you want to withdraw cash, it’s actually the name for one of the most important withdrawal and payment circuits. When merchants insert your card into the POS terminal and ask you if you’d like to pay with "credit card or bancomat?," the question actually means, "would you like to pay with a credit card or debit card?"

Mobile payments – a whole new level of convenience

According to Inc., did you know that people typically use their smartphones for more than 4 hours a day? Yes, really. And that’s why it’s no surprise that phones have become a key part of our purchasing process.

When it comes to mobile payments, there are two types – remote payments and proximity payments. For example, if you want to buy an app on your smartphone, you need to create an account on your phone (for example, with Google or Apple ID). You’ll then enter the details of your preferred payment method and to complete your purchase, all you have to do is identify yourself and proceed with the confirmation, which happens remotely.

Comparatively, proximity payments mainly involve NFC (Near Field Communication). This is technology that allows two devices to communicate with each other when they’re brought together. For example, you can make purchases in a store by simply bringing your smartphone close to the reader, generally at a maximum distance of 10 cm. The purchase is then deducted from a prepaid in-app account, or directly from your current account.

All N26 Mastercards are compatible with mobile payments. If you have an N26 account, you don't even have to worry about taking your wallet or purse with you – you can pay directly with your smartphone, not only online but also in stores and in-app. Every transaction will appear on your account in real-time.

P2P (peer-to-peer) payments – the fastest way to send money

Consider this: it's Saturday night and you’re about to go out to have dinner with your friends. Unfortunately, you're already running late and don't have time to withdraw cash. And although a friend of yours steps in and offers to pay for your meal, you now owe them money that you’d love to pay back as soon as possible.

Luckily, there’s a solution that lets you settle your debt in a matter of seconds. We’re talking about peer-to-peer payments (P2P). These payment methods allow you to instantly transfer funds from your bank account to another person's account via the internet or your smartphone. If you have an N26 account, try it out for yourself with MoneyBeam. This feature makes sending money to your contacts faster than a text, and you don’t even need to have their bank details. If you’re a N26 customer, you’ll receive the money in real-time, while your friends who aren’t with N26 yet will be sent a link where they can enter their details. With MoneyBean, splitting the bill when eating out with friends or when you’re on a group holiday has never been easier!

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By N26

The Mobile Bank

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