Cashless payments are changing how we spend money
Cashless payments will become the norm in the next few years as online wallets like GCash become more prevalent.
You may even argue that it’s already prominent due to the widespread use of credit and debit cards.
A recent study shows that our new payment method is changing our spending habits.
University of Adelaide and University of Melbourne researchers studied 71 published papers to view spending patterns across 17 countries.
READ: All you need to know about the Cash App
They found that going cashless makes us more likely to spend more money compared to using paper and coins.
In response, people should choose their payment methods carefully to save money.
How do cashless payments affect our spending habits?
Cashless Payments Are Changing Our Spending Behavior, Study Reveals https://t.co/QA7ldUUqPN
— ScienceAlert (@ScienceAlert) June 25, 2024
Paying for goods and services using GCash via money transfer or QR codes typically makes people more lax with their budgets compared to using cash.
The researchers say in their paper on the Journal of Retailing that this phenomenon probably stems from a lack of physical representation:
“Cashless methods generate less memorable transactions when compared to cash payments, where money must be physically counted and handed over.”
“This reduced memorability naturally reduces the pain of paying, making it easier for consumers to spend more with cashless methods,” the paper adds.
The difference in spending was “small, but significant, but it was greater for “conspicuous consumption” spending. The latter involves buying stuff that signals status like the latest sneakers or jewelry.
Cashless payments may have boosted spending, but it did not affect giving. The researchers say people donated or tipped the same amount compared to using cash.
“Against our expectations, we found that cashless payments do not necessarily lead to greater tips or donations, in comparison to cash,” says marketing researcher Lachlan Schomburgk from the University of Adelaide.
Inflation has no effect on cash vs cashless payments. Often, more positive economic conditions lead to a greater cashless effect, but it has decreased slightly over time.
That means, people might be getting used to controlling their cashless payments.
Nevertheless, Schomburgk recommends carrying cash, instead of cards, to avoid excessive spending.
