How Payment Method Impacts Your Buying Decisions

The choices you make in the marketplace are all about knowing what you’re getting and how much you’re paying. Being frugal is about more than pinching pennies here and there; it’s about knowing what causes you to spend more than you should, and avoiding those things.

While some of those things are pretty obvious to recognize – such as not picking up items while you’re in the checkout lane, knowing they’re probably cheaper somewhere else in the store – other factors aren’t as intuitive. You might not realize it, but even the payment method you choose to use can have some bearing on the decisions you make.
In a series of recent studies by Professor Promothesh Chatterjee of the University of Kansas and Professor Randall Rose of the University of South Carolina, the connection between payment method and how we look at products was examined.

What the researchers discovered was that customers who were primed for credit were more likely to focus on benefits, whereas customers that were primed for cash were more likely to focus on costs.

Among the specifics that the researchers discovered:

·         Consumers who were primed for credit were much more likely to remember benefit-related words than they were to remember cost-related words.

·         Cash primed customers, on the other hand, had better recall of cost-related words than they did of benefit-related words.

·         Cash customers were more able to identify all aspects of cost, including things beyond simply the purchase price of an item. They looked at things like delivery or installation costs, installation time, and even warranty costs.

·         Credit customers were more likely to be drawn to high-image products, and those products with greater benefits.

·         For credit customers, the “pain of purchase” is low. The purchase process is separated by a month or more from the payment process. This isn’t something that was newly discovered in this research; rather, the results in these studies seemed to confirm the idea.

·         Consumers who were primed for credit responded more quickly to benefits than they did to costs.

·         Consumers who were primed for cash responded more quickly to costs than they did to benefits.

·         Researchers were able to prime consumers simply by putting credit-related ideas into their minds. In retail applications, this could include things such as placing credit card stickers on the doors, having offers for credit inside the store, etc.
This research has a number of implications for us as consumers. It reminds us that, while we might try to always make good purchase decisions that fit within our budget, credit can be alluring.

It’s easier to make an irresponsible and frivolous purchase with a credit card than it is with cash. When you pay with cash, you immediately get to watch your cash deplete. When you pay with credit, you don’t feel that pain, and are likely to make decisions that don’t factor in cost as much as they do benefits.
If you want to make a cost-conscious buying decision, you need to pay with cash and train yourself to ignore all of the credit priming that businesses do when you walk through their doors.
David Rodwell is a seasoned writer in business and personal finance who takes a particular interest in payment processing technology. You can find more of his articles located at

© 2009 - 2023. All Rights Reserved. Powered by Blogger.