There has been a shift in spending trends among consumers. With the increase in cashless transactions, a study revealed that people are spending more than before. The study was conducted by a team from University of Melbourne and University of Adelaide, it analysed 71 papers and looked at spending habits of 17 countries published in the Journal of Retailing.
People tend to be less strict with their budget while tapping a phone or a card when compared to taking out notes or coins, according to the report.The reason this may be the lack of physical representation of money being spent.
“To prevent spending more than planned, we recommend consumers carry cash instead of cards whenever they can, as it acts as a self-control method,” a Science Alert report quoted marketing researcher Lachlan Schomburgk from the University of Adelaide.
“When using cash, people physically count and hand over notes and coins, making the act of spending more salient. If nothing is physically handed over, it’s easy to lose track of how much is spent.”
There has been a difference in spending patterns too. People have started spending money on luxury products as a status symbol.This pattern has been observed before too but never on such a scale. Spending on donation or tipping has, however, remained the same for cash and cashless transactions.
“Against our expectations, we found that cashless payments do not necessarily lead to greater tips or donations, in comparison to cash,” said Schomburgk.
There has been a link between positive economic conditions and cashless transactions.Though this trend is declining over time. The level of inflation has, however, not affected cash or cashless spending.
The study also found that the effect of the shift towards cashless transactions has become weaker over time, suggesting that as cashless payment methods have become more common,and have a less impact on consumers.People have become more habitual to cashless transactions.
“The transition towards a cashless society seems almost inevitable. I believe this research is crucial because it shines a light on an overlooked aspect of this transition: how payment methods influence our spending behavior,” Schomburgk was quoted in the report.”This understanding can help empower us to make more informed purchasing decisions,” she added.
