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The Pain of Paying

“The pain of paying” is a phrase behavioral economists use to talk about the differing levels of inhibition consumers feel when they pay in different ways. In this article, they use cash as a example of being a more painful transaction than a credit card, because you can see your money evaporating before you. Personally, I find using my debit card more painful than using cash, because of an iPhone app I use called Mint. It is linked to my brokerage account, and I check it daily (slightly compulsive) to see how much is in my account, and where I spend the most money. Cash transactions do not show up, so for me, cash transactions are less painful. But I digress…

Thanks to new payment technologies, specifically with mobile phones, we now have another way to  induce consumers into spending more, by directing their attention away from transactions. Dan Ariely, a behavioral economist at Duke University says, “I think that Apple Pay would have lower, the lowest, pain of paying. I think maybe initially it would have a higher one, but over time, people would basically stop thinking about it and it will create a low pain of paying, and therefore higher level of consumption.”

Do you all think that mobile payments are less painless than cash or credit card payments? How about apps like Venmo? Could apps like Apple Pay lead to a frenzy or excessive level of  spending?


  1. cookg15 cookg15

    I personally agree that mobile credit apps (and cards for that matter) are much less painful than cash transactions. When a friend charges me on Venmo, I usually click on the “pay” button without hesitation as long as I know I have enough in my account to cover the payment. Even Amazon’s one-click purchasing feature makes consumption easy and thoughtless. In just one click, I can buy anything without even having to enter my credit card information. However, I don’t think that overall consumption will increase; rather, I think that the ways people consume will change. Online payment and ordering will become more frequent, while trips to places like Walmart will be replaced by more convenient options.

  2. wintera15 wintera15

    I definitely agree that the idea of our smartphones turning into wallets is already taking place. Furthermore, online shopping and ordering items on Amazon will continue to grow. That being said, I don’t think places like Walmart are going to be replaced anytime in the near future.

  3. moorem15 moorem15

    I agree that using cards to pay for transactions is much less painful than paying with cash. I don’t use Paypal very much except besides paying for Netflix, but I can absolutely see how it could drive consumption if it became more permeable.

  4. The US is behind in this, in some countries you just touch your cell phone at the subway kiosk to pick up a newspaper and a snack, and you tap it as you enter/exit. No more subway ticket, no more pocket change.

  5. grieve grieve

    I agree that using my debit card is much less painful than giving up cash. Most of the time I just use my debit card and rarely check how much I have left in the account, and then I’ll get an email notification telling me I fell below a threshold. Cash, on the other hand, rarely gets spent, and sometimes will sit in my wallet for months. I think Apple Pay will be less painful than even debit or credit cards, but I don’t think it will be a significant increase.

  6. winn winn

    While I agree that these types of systems are significantly less ‘painless’ than cash or debit, I wonder which (or if any) of these systems will become universal enough to be widely used by the public. At what point are the network externalities enough to cut down on these transaction costs more fully?

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