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Paying in a blink of an eye: it hurts less, but you spend more

Author

Listed:
  • Marie-Claire Broekhoff
  • Carin van der Cruijsen
Abstract
Consumers have been switching from cash to electronic means of paying and have become increasingly fond of online shopping. The COVID-19 pandemic has accelerated these trends. What these trends imply for the pain of paying that consumers experience has barely been studied. As pain of paying can help prevent overspending, it is important to research this topic. We designed a detailed consumer survey to do so. Using this rich data on the Netherlands, we find that electronic payments – both online and offline – hurt less than cash payments. This holds especially for contactless payments and iDEAL payments, a frequently used online payment method in the Netherlands. Interestingly, we find this for older people in particular but not for teenagers. Furthermore, the pain of paying is positively related to the price of the product or service and slightly lower for a fun trip compared to grocery shopping. The pain of paying is relatively high for women, highly educated people, people without a partner, people who find it hard to make ends meet with their income, tightwads (i.e. frugal people), people who frequently check their payments account and people with a low level of financial literacy. On average, cash is perceived to be most helpful in preventing overspending, whereas contactless payments are the least helpful.

Suggested Citation

  • Marie-Claire Broekhoff & Carin van der Cruijsen, 2022. "Paying in a blink of an eye: it hurts less, but you spend more," Working Papers 760, DNB.
    • Handle: RePEc:dnb:dnbwpp:760
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    File URL: https://www.dnb.nl/media/htbnszz1/working_paper_no-_760.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Broekhoff, Marie-Claire & van der Cruijsen, Carin & de Haan, Jakob, 2024. "Towards financial inclusion: Trust in banks’ payment services among groups at risk," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 104-123.
    2. Marie-Claire Broekhoff & Carin van der Cruijsen & Jakob de Haan, 2023. "Towards financial inclusion: trust in banks’ payment services among groups at risk," Working Papers 795, DNB.

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    More about this item

    Keywords

    D12; D91; E42;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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