Pain of Paying Moves to Digital Payments

Research has found that paying with cash is associated with pain and that people tend to spend less using cash rather than a payment card. A study from the early 2000s found that consumers paying with cash spent less than those using a pre-paid card. The study also looked at consumer receipts from a grocery store and these corroborated the findings. In addition, it seems that willingness to pay (the maximum amount a consumer is prepared to spend on a product or service) has traditionally been higher for debit cards than cash.

Quite why all this happens is not clear. It appears that the use of physical cash activates the pain centre in the brain, although there is a view that the pain is caused by a lack of reward response – where the brain associates an action with feelings of pleasure. There is a suggestion that this reward response is activated by credit cards far more than by cash. Mobile payment, however made, have also been found to have a similar effect. The result is higher spending compared with buying with cash.