Cash Creates Deeper Connection to Purchase Researcher Says

by Ben Jackson 0

People who pay cash feel a greater attachment for the things they buy than those who use other forms of payment, a study suggests.

In each situation, individuals who paid using the more painful form of payment — cash or check — felt more connected to the product they purchased or the organization they donated to than those who paid with debit or credit.

The researcher, Avni Shah, an assistant professor of marketing at the University of Toronto, tried experiments with both physical items and donations and found in each case that cash users were more connected with the results of their transaction.

In the lab experiment, Shah and colleagues gave 94 college students $5 each — in the form of either cash or a voucher — and asked each student to make a donation to one of three charities. Those who donated cash reported feeling more connected to their charity than those who donated by voucher, and were more than three times as likely to wear a lapel pin showing public support for their charity of choice.

While the article does not suggest why, it may be that the use of cash creates an instant connection of value with the items or causes. With cash, value is no longer abstract, and the transaction is a discrete one that is not lumped into an overall balance with multiple transactions.

The story also suggests that retailers could encourage cash purchases to try to build loyalty and connection among customers. While many small businesses, especially gas stations, do encourage cash use and offer discounts for cash buyers. But the research does not answer whether the sense of increased connection would also influence a person’s overall payments choice. Given the growth in non-cash payments, it would seem that connections based on cash are not enough to encourage continuous cash use, but the sense of connection may be a new phenomenon that only exists in a world with multiple payments choices.

Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group

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