Exploring the origin of pain of payment in cash and its relevance to computer payment interface

Abstract

<p>Past research has found that consumers spend more with credit card than with cash. The current studies shows that the necessity to count out cash can partially explain the effect, and the pain of paying due to counting cash is lowered when the process of counting is disrupted. Subjects in Experiments 1 and 2 hypothetically bought office supplies for a company using a computer. In Experiment 1, subjects paid by dragging-and-dropping (DD) images of cash, DD tokens, typing the virtual check amount, or with a one-click credit card payment. Spending was higher with credit card than with tokens or cash. In Experiment 2, subjects paid with cash using one-click and DD interfaces, and credit card with one-click, DD, and swipe-card interfaces. Spending was significantly lower in the DD conditions than in the one-click conditions, while no difference was observed between cash and credit card. Based on a hypothetical financial profile that controls for budget constrain, subjects in Experiments 3 and 4 were asked to pay their past expenses and then indicated their purchase intention for a discretionary product. In Experiment 3, subjects paid with credit card using one-click or regular DD cash interface, or DD cash interface where subjects were asked to either memorize some English letters or the payment amount right before their payment. The pain of paying was significantly lower in the DD cash interfaces with memory load relative to the regular DD cash interface. In Experiment 4 subjects paid with credit card using one-click interface, DD cash interface with bills of small ($20) or larger ($100) denomination. Purchase intention was significantly higher in the large denomination condition relative to the one-click condition while there was no difference in pain of paying across conditions. It is concluded that the need to count cash inhibits spending (Experiment 1 & 2), and the likely mechanism is one's attention to counting rather than the mental rehearsal of the payment amount (Experiment 3) or physical effort (Experiment 2). In addition, the size of bill denomination also affects one's purchase intention for a product (Experiment 4). Implications of the findings were discussed.</p>