The old axiom that people tend to up their spending when paying by card rather than with cash may lie in the recall accuracy of individual consumers, according to research published by the University of Cologne and the Alpen-Adria-Universität Klagenfurt.
The research team carried out a field study to determine recall accuracy in relation to recently made payments. By gathering data in cafeterias at a German university during the summers of 2015 and 2016, they analysed interviews with 496 students that were conducted immediately after the act of paying.
“We were able to show that individuals who pay by card have a less accurate recall of the amount paid than individuals who settle their bill with cash”, the authors summarise, who say that the results are relevant for the financial wellbeing of everyone. “A precise recollection of past spending has an effect on the willingness to spend money in the future.”
The trait appears particularly entrenched in multifunctional cards that incorporate non-payment functions such as bonus programmes and ID, and more so for smartphones and wearables.
“To heighten our awareness, we need designs that separate the payment function from other functions, or that visualise the act of spending money, such as immediate payment information or transaction summaries,” say the authors.