Research Shows Cash May Be a More Painful Payment Method
If you ever saved up your allowance during childhood to make a purchase, you may recall being extra careful with that new toy or jacket. You did earn it yourself, after all.
Now, research might explain why you felt such attachment to those items.
Cash and the Emotional Attachment
Recent studies show that paying by cash or check – opposed to credit or debit cards – increases a consumer’s emotional connection to a purchase, reports Transaction Trends.
The studies, led by Avni M. Shah, an assistant professor of marketing at the University of Toronto, were performed to explore the consequence of paying with credit cards.
Researchers found that technological advancements in payments (a.k.a Google Wallet, PayPal, etc…) are increasing a consumer’s emotional distance from making a payment. In turn, spending is becoming less painful.
Types of Payment Pains
In one study, consumers purchased the same mug for $2, with half being told to pay by cash and the other half being told to pay by card. Later, they sold their mugs back. Those who paid by cash charged $6.71, whereas those who paid by card charged only $3.83.
In another experiment that focused on charitable donations, consumers had the option to donate by either cash or voucher to a charity they knew nothing about.
After donating, they reported how connected they felt to the charity they selected. Those who donated by cash felt more connection than those who didn’t.
Cash Payment Pain Explained
So why do people feel more connected when they make a cash payment? “You feel something when you physically part with your money, and there are different levels of pain depending on the type of payment,” Shah said in a University of Toronto press release. “Something tangible like cash will feel more painful to part with than paying by check, which will feel more painful than paying by card and so on.”
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