Is Paying With Cash More ‘Painful?’

How did you pay for your coffee this morning?

If you’re among the group of people who prefer paying in cash over a credit card, debit card or mobile payment app — and yes, there are those people out there — a new study reveals that you might actually be more “proud” and emotionally connected to your purchases than the average costumer.

A new study by Avni M. Shah, an assistant marketing professor at the University of Toronto Scarborough, published in the Journal of Consumer Research found that people paying for items in cash associate more of a “sting” to the transaction, thus becoming more invested in the purchase and emotionally attached to the item they purchased.

Conversely, Shah found that people who made their purchases via a credit card tended to value those transactions or items less.

People who used checks for purchases also seemed to feel more “painful” about the act of writing out the check and a greater connection to the transaction.

“While the convenience of going cashless is undeniable, it comes with an inadvertent downside — we tend to value purchases less when using a card than when we pay via the more ‘painful’ methods of cash or check,” Shah wrote in the findings of her study.

In one study, Shah sold consumers identical coffee mugs for $2 apiece, but half were told they could only purchase the mugs in cash, while the other half were told they could only purchase the mugs via their credit or debit card. Several hours later, Shah asked to buy the mugs back from all participants but found that costumers who paid in cash were asking $3 more per mug on average than those who purchased with their cards.

Some of the cash buyers even refused to sell their mugs back, Shah said.

In another study, Shah gave the group either $5 in cash or a $5 voucher and asked them to make a charitable donation to one of three listed charities. Afterwards, Shah asked the participants how “connected” they felt to the donation, and those who donated in cash reported feeling a greater connection to their charity, even though they hadn’t even used their own money to make the donation.

“The form of payment clearly influences the subsequent value of the purchase to the consumer, even when the objective monetary cost remains constant. Using cash or check seems to increase the psychological ‘pain’ or sacrifice of the act and creates more affinity with the product or brand,” Shah wrote.

So, if you’re looking for greater aspirational value out of your next transaction, you might want to leave those credit cards at home and just pay in cash next time.