With the rise of digital payments in developing and developed countries, people’s spending behavior has changed significantly. A study by a team from the University of Adelaide and the University of Melbourne in Australia concluded that non-cash digital payments encourage people to spend more than before. The researchers conducted a meta-analysis of 71 previous studies and observed the spending habits of people in 17 countries. They found that consumers’ convenience often led them to spend more on unnecessary luxuries.
Lachlan Schomburgk, a marketing researcher at the University of Adelaide, according to Science Alert says “We recommend that consumers carry cash instead of cards to avoid overspending, when using cash, people physically count and hand more notes and coins, spend more. It’s easy to lose track of how much has been spent if nothing is physically given”.
Researchers say that the relationship between high costs and non-cash payments has been around for a long time. However, they say this is the first time people’s behavior has been tracked by this fee.
The difference in costs was “small but significant,” the researchers said. It’s an even bigger problem for “discretionary shoppers” who buy items that reflect status, such as fancy clothes and jewelry. The team also found that digital payments had no effect on tips or donations. People are spending more money on charity than ever before.
Schomburgk says “Contrary to our expectations, we found that non-cash payments did not generate more tips or donations compared to cash”.
In addition, the research team found a relationship between more positive economic conditions and greater non-cash exposure. It is also argued that the influence of non-cash has weakened over time, with less impact on consumers as non-cash payment methods become more common.
He says “The transition to a cashless society seems inevitable. I think this research is important because it addresses an overlooked aspect of this transition: how payment methods affect our spending habits. This understanding can help us make more informed purchasing decisions”.
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