Card payments: the cashless effect on spending

A habit that can have consequences for your spending.

Card payments and higher spending

Paying by card at a supermarket checkout has become an entirely routine action for many shoppers. Yet this apparently harmless habit may have an impact. Several studies have identified an unexpected effect linked to this behaviour.

Simply using a debit or credit card appears to lead people to spend more than they would if they paid in cash. In research published in the Journal of Retailing in 2024, Australian researchers examined 71 studies conducted across 17 countries, involving 11,000 participants.

A “small” but “significant” effect

Their findings confirmed a “cashless effect”: digital payments result in higher expenditure than cash transactions. The researchers described the effect as “small”, yet “significant”.

Why does this happen? Quoted by L’Internaute, which reported on the BBC, Richard Whittle, an economist at Salford Business School, said: “The ease of paying by card can lead consumers to spend without thinking and buy things they do not really need”.

Cash makes spending more tangible

Stuart Mills, a lecturer in economics at the University of Leeds, expressed a similar view, adding: “Cash gives immediate and visible feedback on what we are spending”. It is precisely this uncomfortable feeling created by handing over cash that discourages some customers from making a purchase.

The scientists now hope that everyone becomes aware of their conclusions. Whether academics, consumers, professionals or even policymakers, all should consider the influence that cashless payments can have on spending.