Paper or email? Pros and cons of digital receipts

A Kmart receipt on the bottom of a shopping cart in front of a store in San Mateo, Calif.
David Paul Morris | Bloomberg | Getty Images

The paper receipt has served us well. It's simple and practical, but in this digital world, that little scrap of paper is headed toward extinction.

E-receipts are often promoted as a way to save paper, and that's certainly true. They're also convenient—easy to file and to find if you want to return an item, make a warranty claim or need a receipt for tax or business purposes.

But let's be honest, something else is going on here.

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Merchants see digital receipts as a way to "engage" with customers. Translation: They see them as an efficient way to sell you more stuff.

"Collecting customer data is always a challenge, even at the register," said Ian Goldman, CEO of Celerant Technology. "There are all kinds of issues about getting an effective customer list, and emailing receipts is a fairly effective and simple way to get accurate contact points for your customer base."

The marketing play

Armed with your email address, a retailer can try to up- or cross-sell you with personalized sales incentives.

According to a 2012 report from Epsilon International, 83 percent of retailers offering electronic receipts did so to get customers' email addresses. The report says e-receipts have proved "an innovative communications vehicle for retailers that offer limitless marketing possibilities."

Digital receipts also provide retailers with "deeper insight into consumer shopping habits, which can lead to more targeted advertising mailers, promotions, and emails," the report said.

Jason Shapiro, CEO of TransactionTree, a company specializing in digital receipts, warns retailers that using email addresses for intrusive marketing efforts could backfire.

The TransactionTree system does not automatically add to a company's marketing database the email addresses that customers provide to get e-receipts. A customer must opt in for that to happen.

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"We are extremely against the assumption that the customer who wants an e-receipt also wants additional marketing," Shapiro said. "You already have the opportunity to deliver personal marketing messages to them on that digital receipt, but that does not give you permission to start blanket marketing to them."

That no-spam policy makes customers more likely to answer "yes" when asked if they'd like a digital receipt, he said.

Old habits die hard

Apple was the first to provide e-receipts, back in 2005. Today, stores all over the country offer the option. Rental car companies and hotels also offer e-receipts to help speed clients on their way.

But are customers actually choosing the nonpaper option?

"Nationwide, [e-receipts are] still a tiny fraction of the receipts given out at brick-and-mortar stores," said Jack Gold, president of the research firm J. Gold Associates. "Retailers have to tread carefully. They want to move to this new technology, but they can't move until their customer base is ready."

There's also a generational element involved. Young shoppers feel comfortable getting things electronically, but many older people still want to walk out of the store with a paper receipt.

Gold expects digital receipts to achieve acceptance more quickly in metropolitan areas on both coasts and then spread to smaller cities and towns.

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"The market is not going to change in one fell swoop," he told me. "People who think we're magically going to switch over to digital receipts in the next two or three years are wrong."

What about privacy concerns?

Paul Stephens, director of policy and advocacy at the nonprofit Privacy Rights Clearinghouse, wants people to stop and think before volunteering another piece of personal data.

"If you're offered that option, don't accept it," he said. "You're giving up information that can be hacked, as we saw in the Target breach. The more information a retailer has on you, the more information a hacker can get a hold of if they breach the system."

Criminals can use those stolen email addresses to develop phishing attacks aimed at a store's customers. Called spear phishing, it is a more effective method for disguising spam and tricking people into responding.

"You are much more likely to believe that bogus email is legitimate," Stephens said. "The odds that you will respond and give out private information increase exponentially."

Into the future

Despite the concerns and potential downside, digital receipts are the future. How do you deal with it?

Consumer advocates recommend setting up a separate email account that you use only for e-receipts.

"That way you can track them more easily, and they won't get mixed up with all your other email," said Katherine Hutt, director of communications and media relations for the Council of Better Business Bureaus. "You can also see if a company is being over-aggressive with their marketing to you."

Remember, digital receipts can get caught by spam filters or be sent to the wrong person if the clerk types in the wrong email address. That's why the BBB suggests checking your smartphone while you're at the register to make sure that e-receipt reached you.

If it didn't, ask for old-fashioned paper.

—By CNBC contributor Herb Weisbaum. Follow him on Facebook and Twitter @TheConsumerman or visit The ConsumerMan website.