Gaby
A new study finds that cashless payments are changing how—and how much—we spend.
For over 3,000 years, cash has been our trusted companion. However, people in developed countries are increasingly moving away from physical money. Researchers say this shift doesn’t help people keep their budgets in check. In fact, the study found that cashless payments encourage consumers to spend more.
To reach this conclusion, a team from the University of Adelaide and the University of Melbourne conducted a meta-analysis of more than 70 published studies. The authors examined the spending habits of 11,000 participants from 17 countries.
The researchers suggested that when we use a card or mobile phone at the checkout, we tend to monitor our budgets less strictly than when we pay with cash. This may be because, in that moment, we don’t always have a clear sense of how much money we’re actually spending. “When using cash, people physically count and hand over bills and coins, making the spending process more noticeable,” said Dr. Lachlan Schomberg, the lead author of the study from the University of Adelaide.
“We recommend carrying cash instead of relying solely on cards, because it acts as a method of self-control,” he added.
What the study found
The effect was particularly strong for status purchases like luxury clothing or jewelry.
The team was surprised to find that electronic payments were not linked to increased tipping or charitable giving.
They also found that wealthier countries tend to have higher rates of cashless transactions. The spending boost from cashless payments weakened over time, the team found — suggesting that as cashless methods become more common, people get used to them and the effect fades.
Next, the researchers plan to expand their work to cover emerging payment technologies, including cryptocurrency, Science Alert reported.
“The shift to a cashless society seems almost inevitable. I believe this research is crucial as it sheds light on an aspect of this transition that often goes unnoticed: how payment methods influence our purchasing behavior,” Dr. Schomberg said. He added that this understanding could help people make more informed purchase decisions.
The results of the study were published in the Journal of Retailing.
