Toronto – When it feels easy to pay for something, it might just make us feel less
connected to what we’re buying, a new University of Toronto study says.
“Debit and credit cards rule the
marketplace, and while going cashless is convenient, that convenience may come
at a price,” says Avni Shah, an assistant professor of marketing at U of T Scarborough
and the Rotman School of Management.
Across two experiments Shah and her
colleagues at Duke University and the University of North Carolina-Chapel Hill
looked at the potential consequences of paying with cards over cash by focusing
on how connected consumers felt towards what they bought.
The first experiment asked
participants to buy a coffee mug normally priced at $6.95 for the discounted
price of $2 with either cash or credit. Two hours after the purchase they were
then asked to sell back their mugs at a price of their choosing. Despite the
fact it was the same mug owned for the same amount of time, those who paid cash
wanted nearly $3 more than those who paid with a card.
“Those who paid with cash also
reported feeling more emotionally attached to their mug,” says Shah.
In the other experiment the
researchers wanted to eliminate possible reasons for the cash-payers charging
more for their mugs because of the effort tied to finding an ATM and paying
bank fees, or the added bonus for card-payers earning rewards points for their
purchase. Here participants were given $5 in either cash or voucher to give to
one of three charities and a ribbon lapel pin corresponding to the charity they
“We found that people who donated by
cash felt more connected to their chosen charity than those who donated by
voucher. Cash donors also reported feeling less connected to the charities they
didn’t chose,” says Shah.
“In other words, paying by cash made
people feel more attached to what they bought and less connected to what they
So why is it that paying with cash
makes you value something more than paying with a card? Shah says it comes down
to something called pain of payment.
“You feel something when you
physically part with your money, and there are different levels of pain
depending on the type of payment,” says Shah, whose research focuses on the
costs associated with payment and how it affects consumer preference and choice.
“Something tangible like cash will
feel more painful to part with than paying by cheque, which will feel more
painful than paying by card and so on.”
The effect extends beyond just cash
and credit to include other mobile forms of payment including cell phones,
smart watches and new products like Apple Pay, notes Shah. As North America
continues to transition towards an ever increasing paperless economy, she says
it’s important to understand what the implications of these new payment systems
will be for consumers.
“There are shorter product life cycles
and if consumers are feeling less connected to the products they’re already
buying, just add easier access to credit and higher consumer debt levels and
it’s a toxic combination,” says Shah.
There’s been some positive systems in
the marketplace that Shah points to as helpful to consumers including the
recent Interac commercials extolling the virtue of cash over credit, and even
mobile apps that remind consumers of when a purchase has been made on their account.
“These should be encouraged because
they can help consumers more careful, deliberate and meaningful purchases,” she
The study is available online and
published in the current edition of the Journal of Consumer Research.
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