University of Illinois Extension
Do you experience purchase pain with cashless transactions?
Send a link to a friend
[November 16, 2023]
When
trying to bring awareness to your spending habits, do cashless
purchases register the same for you? The pain of paying is a term
used to describe the negative emotions experienced during a monetary
transaction (Zellermayer, 1996). Some may remember their thoughts
and emotions about spending their physical money before so many
alternative options became available. The action of purchasing was a
more tangible experience than a swipe of a credit card, the click of
a button online, or the scan of a phone at the checkout.
Paying with cash
Research shows that paying with cash gives a sense of loss to the
consumer as you are physically giving something up in exchange for
your purchase. With the many alternatives (credit cards, digital
currency, mobile wallets, etc.), the exchange is no longer a
physical transaction. Although you know that your credit card and
digital currency options are taking money from your possession, it
may incite less thought and emotion regarding spending.
Using noncash payments
According to the Federal Reserve Payment Study (2022), the amount of
noncash payments in the United States increased to $128.51 trillion
in 2021. With the changes in technological abilities, there is also
a change in experience. How does the spending experience register
with you today? With all the options for payment now, there may be
differences in the level of emotions experienced during financial
transactions. According to Wang et al. (2022), their research
suggests that mobile payments may stimulate spending as a result of
the “pleasure of paying” and mobile payments are more likely to
enhance purchase intention when compared to a cash payment.
Making payment option decisions
Some small town locally owned businesses still prefer cash to avoid
the service costs associated with other methods of payment and even
give a discount for using cash or charge a service fee for using
credit cards. When it comes to a choice of paying a lower amount by
paying with cash, what do you decide to do?
[to top of second column] |
Do you pay for the convenience of
going cashless or do you save a little by carrying cash? For
some people, the service charge at an ATM may be a deterrent to
using cash as this may be similar to the cost of using other
methods of payment. Both ATMs and credit/debit/digital methods
of payment provide a convenience that allows customers to spend
money without going to their bank to obtain cash. Being aware of
the costs associated with your daily choices may help you to
improve your financial well-being.
While there is no one “right” way to make your
purchases, take the time to think about each of your purchases and
the method used to make the transaction. Everyone must decide what
works best in their lives based on their circumstances but making a
spending plan and tracking expenses may help to bring more
acknowledgment to those transactions that now take place so easily.
References
Federal Reserve Payments Study (FRPS). (2022). Board of Governors of
the Federal Reserve System.
Wang, M., Ling, A., He, Y., Tan, Y., Zhang, L., Chang, Z., & Ma, Q.
(2022). Pleasure of paying when using mobile payment: Evidence from
EEG studies. Frontiers in psychology, 13, 1004068.
Zellermayer, O. (1996). The pain of paying. (Doctoral dissertation).
Department of Social and Decision Sciences, Carnegie Mellon
University, Pittsburgh, PA.
[Jamie Mahlandt, Financial Educator,
University of Illinois Extension]
|