Do Easier Purchases Make Customers Less Satisfied?

Written by FinTech Futures
20th July 2016

A University of Toronto study raises a delightfully non-intuitive payments point. Although shoppers gravitate toward the payment forms promising the least friction, do they value purchases more when they are made with more friction, such as cash?

“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,” said Avni Shah, an assistant marketing professor at the University of Toronto, according to a statement from the Journal of Consumer Research.

The university tested participants in several ways. In each case, when the participant paid with cash, they gave the purchase a much higher value. When the product was a mug, cash-users insisted on selling it at a much higher price than payment-card purchasing participants.

In another example, “consumers were given either $5 cash or a $5 voucher and asked to donate to one of three charities previously unknown to them. When asked how connected they felt to their chosen charity, the participants who donated by cash reported feeling more connected to their charity than those who donated by voucher—an especially interesting response given they hadn’t even used their own money,” the journal said.

The results weren’t limited to cash. Paying by check—which is typically more labor-intensive than paying with cash—delivered similar results. The study argues that these more friction-laden payment methods “increase the psychological ‘pain’ or sacrifice of the act and creates more affinity with the product or brand.”

Perhaps the most interesting—and hardest to quantify—of the report’s conclusions is how much the consumer likes the product after purchase. The New York Times quoted Shah saying, “One day she forgot her debit card, so she paid for a latte with physical dollars—and felt her drink tasted better that day.”

If the study’s implications are true and, further, what if the perceived value in a cash transaction is significantly more than the higher labor cost of handling cash and checks? Put another way, what if it’s established that easy-and-quick mobile transactions result in less satisfied shoppers? What if it results in a higher return rate and fewer repeat purchases? Payments providers and merchants may need to be mindful of creating other ways to up the emotional factor of transactions for consumers.

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