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Wiktoria Blazik

The pain of Paying

What if I told you that cashiers will become obsolete? That, instead of long wait lines, all you’d have to do is put your groceries in your bag and leave? Well, that’s what Amazon promised in 2016, when it unveiled Amazon Go, “the future of shopping”. Now this might sound lovely and convenient, but it might be terrible for your wallet. What’s worse is that this is just a part of an alarming rise in overly convenient payment methods, like credit cards and Apple Pay, that essentially drain money from your bank account.


When people use credit cards instead of cash, they tend to spend 12% - 18% more, according to a study by Dun & Bradstreet. What’s even more alarming is what the Federal Reserve Bank of Boston found - that the average cash transaction was for $22, but the average credit card transaction was $112!


Why does this happen? Aren’t credit cards supposed to be good? After all, they’ve made our lives much more convenient. Well, turns out, that might be the problem. Generally, there tend to be three factors that cause such high spending. First of all, you don’t have to pay for a credit card bill until the end of the month, meaning impulse purchases offer instant gratification but delayed costs. Secondly, credit cards are much more convenient, and take less time to pay with. While you may have to find your wallet, get the right bills, and wait for the cashier to count it when you pay with cash, paying with a credit card is just a tap, swipe, and PIN-number away! The final factor is the fact that you don’t see the money. You don’t feel the cost of the transaction. When you pay with cash, you need to rifle through your wallet to find and count the right bills, you feel the money as you hand it over, and you see how empty your wallet looks. This is called the pain of paying. With credit cards, there’s none of that! It’s just a little plastic card that doesn’t change, no matter the value of the transaction or the number in your bank account.


So what do Amazon Go and Apple Pay have to do with this? Well, they’re both super-convenient payment methods, even easier than paying with a credit card. Apple Pay just requires your phone and its password, or even face ID, which makes paying the bills take less than 10 seconds. Amazon Go is even easier, requiring no payment method at all. You walk out the door, and get bills sent to you later.


It’s also likely that we’ll see an increase in similarly convenient payment methods in the future. According to the National Retail Federation, 83% of consumers say that convenience is more important now than it was 5 years ago. 52% of purchases are influenced by convenience, which is reflected by the rise in time-saving apps like delivery services and digital wallets. People are busy, they don’t have the time to count out dollar bills or even type in their PIN-number; they’d rather pay with their phone or simply be able to walk out of a store.


While both Apple Pay and Amazon Go may be incredibly convenient, they’re also very dangerous for people’s spending habits. Already, there’s irrefutable evidence that the ease of paying with credit cards significantly increases spending. This is because of a thing that psychologist Wendy Woods calls friction. Basically, friction is how easy or difficult it is to do something. We’ve already established that, compared to cash, credit cards have relatively low friction. But Apple Pay and Amazon Go have even lower levels of friction; it’s incredibly easy to pay with them! And this means that people will pay even more using such methods, since there’s no friction to decrease, or even stop, their purchase. Moreover, you can’t see the money you’re spending at all, which has already been proven to increase spending!


So, if all these super-convenient payment methods are so terrible, who’s fault is it? Clearly, there must be someone who benefits from the demise of our bank accounts! Well, no. Companies like Apple and Amazon have seen that consumers value convenience, often over other factors like price and quality, and they’ve just supplied to fulfil that demand - we only really have our desire for convenience to blame. If you want to stop spending so much, then consider paying in cash, or really thinking about the cost of what you’re buying. But is it really all that bad? 61% of consumers state that they would pay extra for a more convenient experience. At the end of the day, we, as individuals, have to consider what we value more - convenience, or money?


Wiktoria Blazik is a year 12 student studying Economics, Maths, History, and Biology. She's particularly interested in behavioural economics and the interactions between economic and political policy, hoping to study Philosophy, Politics, and Economics at university.

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