Losing touch with cash can lead to losing touch with your inner (bank) balance

calendar iconNov 13, 2017


A marketing research journal published online on 6th November 2017, includes an insightful chapter by accomplished academics Rufina Gafeeva, Erik Hoelzl and Holger Roschk which finds that as we lose touch with cash, we lose touch with our spending accountability.

The leading chapter titled, "What else can your payment card do? Multifunctionality of payment modes can reduce payment transparency" concludes that those who rely on contactless or digital payments are less able to recall how much they've spent because the brain does not process the concept of 'losing money' as well as it would when using cash.

The paper argues that those who rely on non-cash payment options are more likely to find themselves willing to spend again because the missing tangible component they'd have from using cash means the brain's understanding of a trade occurring is limited.

Excerpt from ScienceDaily article

According to current estimates, approximately 3 billion new so-called smart cards will be issued across the globe in 2017. Smart cards conveniently combine the payment function with additional types of functionality. Since 2000, the number of smart cards that are carried in users' wallets has grown by around 20 percent annually. It is anticipated that these types of functions will be made available directly through smartphones or smartwatches in the future.

According to the authors of the study, these results are relevant for the financial well-being of everyone. After all: "A precise recollection of past spending has an effect on the willingness to spend money in the future," the researchers explain. Efforts to encourage the customer to adopt a financially healthy behavior require increased transparency.

"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."
"Rufina GafeevaLead author "What else can your payment card do.."As quoted on ScienceDaily

Excerpt from nine.com.au article

Lead author Rufina Gafeeva said that the introduction of "smart" payment methods could mean that people spend far more money than what they are comfortable with.

Gafeeva argues that the key component missing from card transactions is a visual prompt to let your brain know you are essentially making a trade when purchasing goods or services.

"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.... Individuals who use the non-payment functions of the multifunctional card are less likely to remember the transaction details accurately."
"Rufina GafeevaLead authorUniversity of Cologne

Excerpt from Marketing Letters Abstract by Rufina Gafeeva, Erik Hoelzl and Holger Roschk

Payment modes (e.g., cash vs. credit card) vary in the transparency of the outflow of money. Smartcards (multifunctional cards), which bundle payment with non-payment functions (e.g., loyalty programs, identification, and other information functions), have become an increasingly popular payment mode. This shift toward multifunctionality in payment modes is assumed to reduce payment transparency and consequently to decrease consumers’ recall accuracy of past expenditures. We employ a field study to examine recall accuracy for recent purchases with cash, a single-function card, and a multifunctional card.

We find that recall accuracy is lower when using a single- or a multifunction card than cash. We also find that it is not the multifunctionality of the card that results in a higher recall error but the individual usage patterns: A higher usage frequency of the non-payment functions results in a higher recall error.

Download journal here


Alpen-Adria-Universität Klagenfurt | Graz | Wien. "Customers who pay for their purchases by card are less likely to remember the precise amount paid." ScienceDaily. ScienceDaily, 10 November 2017.

Gafeeva, R., Hoelzl, E. & Roschk, H. Mark Lett (2017). What else can your payment card do? Multifunctionality of payment modes can reduce payment transparency.
High-quality, shorter papers on marketing, the emphasis being on immediacy and current interest. The journal offers a medium for the truly rapid publication of research results.

Marsh, Stuart. "Why paying for everything with card could be trouble for your bank balance." Finance Nine. November 13, 2017. Accessed November 13, 2017.

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Last Updated: Dec 10, 2019