Payment technology have more of an effect on people’s economic behaviour than we may expect. What you buy is surprisingly dependent on how you pay for it and how you pay for it can have a detrimental impact on spending habits.
Contactless payments and mobile wallets like Apple pay are threatening the concept of cash entirely. As once paper notes replaced metal coins and electronic banking reduced the need for cheques, contactless payments are now doing the same to cash. If they do succeed in replacing cash payments it could mean a huge change in shopper transaction.
The pain of paying
The benefits are obvious. To shoppers, convenience is key. There’s no need for stacks of cash or a purse full of jingling change. What’s more convenient than paying with a mobile device glued to peoples’ hand, or waving a card and being done with it?
In today’s society, we have instant access to such an extensive array of services and information. People have become accustomed to quick service with immediate results. Contactless payments have understood this and provide the instant gratification humans crave and removing some commerce barriers, making it easier and faster to get what you want.
There’s also a security with contactless that cash doesn’t have. if cash is stolen it’s gone but if a card is stolen a simple phone call to the bank will fix the problem. This security gives the shopper minimal liability.
Overall, the experience itself is a less painful one. Literally handing over a material object has a very different psychological effect than waving a contactless card. The “tangibility of notes and coins creates awareness (conscious/unconscious) that something of value is being exchanged”. Contactless cards and Apple pay are such transparent ways of paying, to the shopper it’s virtually like playing with monopoly money. People don’t feel the immediate loss of money, it just doesn’t seem like a ‘real’ transaction. It’s essentially guaranteed that if you were to ask someone how much they spent via contactless when leaving the shop, they couldn’t tell you.
While people do spend more with cards over cash, they also reach for contactless to pay for even the smallest of purchases our spare change would once have covered. A coffee to go, a bottle of water, even a pack of gum. These small amounts individually may not amount to much but collectively cashless payments could drive society into a state of over consumption, little by little. Impulsive and frivolous spending would increase because the less you think about the purchase, the more likely you are to make the purchase.
So, would a world without cash be all that great? A world where every payment made would be traceable, what you buy, when and where you buy it. A world with over consumption and possible debt?
If you’d like to hear more, we’d love to chat. Contact us on +44 (0)1543 255 259 or email us at firstname.lastname@example.org