With the advent of credit cards, mobile wallets and “buy now, pay later” systems, more and more consumers are moving away from cash in everyday life, giving priority to digital ones. However, this convenience makes life difficult for our pockets.
Consumers tend to spend more when using digital payment methods than when using cash, according to a new study published in the Journal of Retailing. Going digital and the refusal of bills seems to encourage people to consume excessively. What's more, it's particularly harmful for tipped service workers, explain researchers from the University of Adelaide.
The research team found no evidence that specific features of electronic payment methods, such as the likelihood of delay or transparency of the process, significantly affect costs.
Instead, the type of market played a key role, with the effect of cash shortages being particularly pronounced when implementing purchases used to denote wealth or prestige.
“The transition to a cashless economy seems almost inevitable. We believe this research is very important because it sheds light on an overlooked aspect of this transition: How payment methods influence our purchasing behavior. This understanding can help us be able to make more informed purchasing decisions“, emphasize the authors of the study.
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