What Cashless Payments Do to Our Impulse Control

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Cash has been on its way out for a while, but even plastic may be a relic sooner than you think. It's way more common to pay with your phone in East Asia, for instance, and with COVID-19 driving demand for contactless options, American consumers are getting used to swiping a screen for payments in certain stores. It's a huge shift from how we normally trade currency for goods and services, though, and it may also come with a huge shift in behavior.


Researchers at the University of Chicago have just released a paper on whether we make more impulsive or less thought-out purchases with cashless payments. Their focus was on healthy versus unhealthy foods, but their findings can apply to any number of shopping habits. "Most people experience a spontaneous negative emotional response to the loss of wealth, particularly when such loss is concrete and vivid," the authors point out. Yet presenting your phone to a sensor is almost totally abstract — it may not even feel like money is changing hands.

"Because such transactions are not concrete, cashless payments are less likely to elicit the negative arousal that is appraised as the 'pain of paying,'" according to the study. Of course, it's important to indulge every so often, just as there's some virtue to frugal spending. There are mindful ways to splurge, but pre-pandemic, research found we were spending more than $400 on unplanned purchases each month. Your best bet, no matter how you pay, is to lean hard on shopping lists. This will need to be a lifelong habit, if technology keeps up like it does, so there's no time like the present to get your phone or wallet in order.