In a world where digital payment methods are rapidly gaining ground, a study from the University of Notre Dame sheds light on the enduring popularity of traditional payment methods like cash and cards. This research offers a fascinating glimpse into consumer psychology and the strategic decisions behind payment choices.
Cash vs. Card: A Global Perspective Despite the rise of digital payments, cash and card transactions continue to dominate the point-of-sale landscape globally. In 2021, a significant 65 percent of all transactions were made using these methods, as reported by Fidelity National Information Services. This statistic underscores the enduring relevance of cash and card in our increasingly digital economy.
New Insights from Notre Dame The University of Notre Dame’s recent study, titled “Purchase Justifiability Drives Payment Choice: Consumers Pay With Card To Remember And Cash To Forget,” delves into the reasons behind consumers’ payment method choices. Led by Christopher Bechler, assistant professor of marketing, along with colleagues Szu-chi Huang from Stanford University and Joshua Morris from Nike, the study explores the concept of purchase justifiability and its impact on payment decisions.
The Impact of Purchase Justifiability Bechler’s research reveals a unique insight: the justifiability of a purchase significantly influences whether consumers opt for cash or card. For hard-to-justify purchases — such as overpriced items or guilty pleasures like cigarettes and candy — consumers tend to use cash. This choice is driven by a desire to eliminate the paper or electronic trail, essentially allowing them to ‘forget’ these purchases. Conversely, for easily justifiable purchases, consumers are more likely to use trackable methods like credit cards.
Methodology and Findings The research team analyzed data from 118,042 real transactions and conducted six experiments involving over 5,000 individuals to understand the causal effect of purchase justifiability on payment method choice. The findings indicate that consumers who diligently track their card expenses often use cash for certain purchases to avoid the mental burden of reflecting on them later.
Implications for Merchants These insights have practical implications for businesses. For instance, a doughnut shop might benefit from accepting cash payments, as consumers may prefer to forget these indulgent purchases. In contrast, a salad shop might not see the same advantage in promoting cash transactions.
Future of Payment Methods As the financial world evolves with cryptocurrencies and innovative payment methods, understanding these behavioral patterns becomes crucial. For merchants and financial institutions, grasping the factors that influence payment choices is key to predicting the adoption and success of new payment technologies.
Conclusion This study from Notre Dame offers a compelling look at the psychological factors driving consumer payment choices. As we navigate a world of diverse payment options, such insights are invaluable for both consumers and businesses in understanding the subtleties of financial decision-making.
Source Acknowledgement: This article is based on the study “Purchase Justifiability Drives Payment Choice: Consumers Pay With Card To Remember And Cash To Forget” from the University of Notre Dame, as reported by Shannon Roddel. The study was conducted by Christopher Bechler, along with Szu-chi Huang and Joshua Morris, and is forthcoming in the Journal of the Association for Consumer Research.
