Do Contactless Payment Options Make it too Easy to Spend Money?

by Matt Klassen on May 31, 2016

Universal_Contactless_Card_Symbol.svgThe two cornerstones of the still emerging contactless mobile payment revolution are convenience and control; that by tapping or swiping a phone or watch or card consumers will have an easier and faster way to pay for things, but through real-time updates and the like, more control over their spending as well. Excuse me for saying, but to me that’s a load of absolute garbage.

Earlier this week the BBC ran an article titled, “Will paying with contactless cards make us less healthy?” The point of the article was this: the easier it is to pay for things, the less people will think about the actual process of paying, the less people will consider their financial resources, the more impulse items (particularly food and drinks) people will purchase.

Health aside, in light of the ongoing consumer debt crisis, one responsible for exponential increases in personal financial insolvency, it is clear to me that people, by and large, need increased checks and balances when spending their money, not less. As psychologists have often argued, there is an intrinsic level of pain associated with spending cash, of giving away something that is yours, and that pain helps many, at least, give a second thought to their purchases (the exact reason many debt management experts immediately transition clients to a cash-only lifestyle).

Simply put, contactless payment almost completely mitigates the pain of spending, which in turn inhibits our impulse control, which leads to impulse purchases that will undoubtedly result in a worsening consumer debt crisis.

If you’ve ever purchased something with contactless payment technology, I have no doubt that you’ll have experienced the same thing that I and many others have; that feeling that you’re not even really spending money. In fact it’s so easy to swipe cards or devices to purchase something that people aren’t even thinking about what they’re buying at all, even if that transaction appears on their bank record moments later.

It is the presence of that transaction notification, payment proponents argue, that allows more control over spending, as understanding how much money was spent is immediate, far faster than receiving a credit card bill at the end of the month. While this technology clearly improves upon this delayed discovery of one’s credit spending by not only spending one’s money, but by informing the consumer as well, I can’t help but think the entire contactless payment industry is operating much like a casino, making it as easy as possible to separate you from your money and doing it in a way where you don’t even give it a second thought. Credit or not, your money is still gone and you likely have no idea where it went.

Claudia Hammond, author of a new book, Mind over Money, has echoed some of these same concerns, arguing that by making payment easier, it removes the rational component of our brain from the entire operation, often leading us to forget how much we spent mere moments later.

“People don’t remember how much they paid when it’s on a card. So I think you’ll be even less likely to know how much [something] cost. Often I have no idea two minutes later [how much I’ve spent] because I was thinking about something else when I put the card on there.”

That said, Hammond is cautiously optimistic that on a whole the problems I’ve outlined here will only be part of the growing pains associated with adopting a new technology in a new economic reality. “I think in the end we’ll get used to it,” she told the BBC. “If we don’t get used to it, we’ll all be broke.” Of course that’s exactly my fear.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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