My late grandmothers (paternal / maternal) never really went to a bank their entire life. Simply because most of their financial needs were taken care of by immediate family. Whenever she needed cash, she asked her father(-in-law), daughter(-in-law), son(-in-law), husband or some other trusted family member and they gave it to her at home. They were her “in-house bank”, and she knew life no other way.

For as long as I can remember, my parents always went to the bank to draw money. Simply because in the 1960’s - 90’s in India – that was the preferred mode of payment. Most people would typically go to   a bank, collect a token, stand in the line to wait for their turn, collect the money, count it and come home.

For both my parents and grandparents, buying anything was mostly “need-based”. So if they had a need to buy something – be it groceries, clothes, jewelry, furniture, car, home furnishings, etc. – it would be because they needed it. It was very rare that they indulged in “impulse based buying” behavior, i.e., buying at whim or without a plan. It was not their way of life, and many times there were genuinely a zillion other priorities which warranted their time, money and attention.

When I started my corporate career in the IT industry at the start of the 21st century, I got a debit card in the first month of my employment. No prizes for guessing that all my payment behaviors were modeled around cash or debit card payments. Till date, I prefer to use cash / debit card for all my payment needs – both online / offline.

So, what is the point I’m trying to really make?

How you start your payment journey is how you will continue to make payments for the rest of your life, unless there is a compelling need to do it differently.

Individual payment behaviors are no different. They are fundamentally a matter of habit, how you cultivate that habit and how you continue to do things by virtue of habit. 

So how are habits formed by most people? By repeatedly doing the same thing. Some studies state that it takes 21 days to form a habit, and some suggest that it takes 66 days to form a habit. No matter what that magic number is, the typical habit loop as it is popularly known is explained below, along with it being mapped to payment behaviors in individuals.

Typical Habit Loop

Cue ---> Routine ---> Reward

Typical (Traditional) Payments Habit Loop

Need ---> Buy + Pay ---> Satisfied Need

Today's Payments Habit Loop

Need / Desire ---> Shop + Buy + Pay ---> Satisfied Need / Happiness

Here’s the other interesting thing about habits | “Habits formed by repetition are the hardest to change” BY Charles Duhigg

I totally agree. Whether it is when you sleep / wake up, playing games on your mobile, watching TV, FaceBook surfing, exercising / not, eating healthy / not.. Life is indeed a collection of habits, and consciously / unconsciously what you do on a daily basis becomes a way of life sooner than later.

Interestingly, very many mobile payments innovators / disruptors recognize this. So they are doing two things.

One, “Catch them young”, i.e., Looking at ways to target the Gen Y, Z, and get them to be early adopters of mobile payments solutions, i.e., individuals who are the phase of life when they are forming their payment habits. For e.g: College students, newly employed individuals, etc. It is no wonder that number of offers / rewards / freebies / discounts, etc. being offered to this target group is amazing.

Two, for the “older” generation who have their programmed payments habits in place – Exploring smart ways to effectively re-program the habit loop using freebies, rewards, offers and discounts.

Mobile Payments Habit Loop

Offer / Deal / Cashback / Discount ---> Shop + Buy + Pay ---> Satisfied Need / Momentary Happiness but not feel right in the long term?

The interesting part is that even after buying at a discounted price or getting a freebie, I find most people happy / satisfied only for that instant. In the long run, they don’t feel good because they end up buying things they don’t need or don’t use!

In the process, it appears that many of us are making a transition from being “need based buyers” to “impulse based buyers” – since our “cue” for buying something is linked to on an offer / discount / reward / deal, rather than a genuine need. Will it take 21 times or 66 times or more to re-program this habit? I don’t know for sure. Till then, will these companies be able to survive and sustain if their customer acquisition strategies are purely based on price-wars around offers / deals / cashbacks and discounts? Are they really modelling habits in people which are not sustainable?

As a consumer – I’m happy with the way I make payments today. I know that there are things which can be simpler, better or faster; but for me to embrace these newer modes of payment (mobile payments, or any other next generation payment solution) – I need to move out of my comfort zone. I need to un-learn two decades of learning; which does not appeal to me! Maybe the incentive is not lucrative enough (yet) for me to switch to mobile payments.

What do you think? Is the winning move to be a market leader in the mobile payments race going to be the solution which is successful in creating new habits and re-programming old habits?

I’d love to hear your views. Leave a comment below…

A version of this post appeared on Economic Times