Call it the psychology of cold, hard cash.
Americans have a love affair with currency. It helps explain why countless movies show characters peeling off bills from a gold money clip and counting or handing them out. And why Ben Cohen of Ben & Jerry’s ice cream
fame thinks flipping through a wad of money “is a very cool, debonair . . . thing to do.” People simply are impressed by the sight of lots of cash.
While these examples don’t constitute scientific evidence, academic research shows that consumers have a strong emotional connection with cash, even as the payments landscape evolves. For instance, a study
conducted at Northwestern University by marketing professor David Gal concluded that men actually salivate when they spy a pile of cash.
“All objects of desire, whether biological or non-biological, activate the same general reward system in the brain. Salivation might merely be the consequence of this,” surmised Gal
, who is now at the University of Illinois Chicago. So add Americans’ emotional connection with cash to the ongoing list of reasons why consumers favor the payment method because they believe it’s convenient, quick and easy and secure
, according to a 2015 Cardtronics Cash Survey.
CASH VS. CREDIT: MORE OR LESS REAL?
The Happiness Project author Gretchen Rubin in April 2016 asked her LinkedIn and Twitter followers, “Does paying with cash make spending money seem more real to you than using a credit card? Or less real?”
The responses she received spotlighted consumers’ emotional attachment to cash over credit:
- "Definitely makes it more real for me when I use cash! I feel a sense of sadness watching my money leave my hand."
- "Cash is tangible and organic. It FEELS more real to pay with cash than credit card."
- "Cash gives the sense of measure and sense of responsibility and it is physical. The feeling is like kissing your kid personally rather than over a video call."
CASH’S INFLUENCE ON THE VALUE OF A PURCHASE
Separate studies by Duke University
and University of Kansas
researchers prove that a relationship exists between the value that buyers place on a purchase and the method of payment used.
The Duke University researchers compared post-transaction connections of shoppers who used debit or credit cards for purchases with those who paid with cash or by check. They found that cash users registered a higher emotional attachment to their purchases, were less likely to consider the options they rejected, and were more likely to be a repeat buyer.
For example, buyers were each sold mugs for two dollars, with half paying in cash and the others in plastic. When asked later to sell those mugs back, the cash payers asked for an average of $6.71 in exchange for the mug, while those who used plastic sought an average of only $3.83.
The study concluded
that 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 seems to increase the psychological ‘pain’ or sacrifice of the act and creates more affinity with the product or brand.”
The University of Kansas research findings suggest that shoppers who use credit cards focus more on a purchased item’s benefits – such as the vivid color of a new TV – while those using cash center more on an item’s costs, including factors such as price, delivery time, warranty costs and installation fees.
“When it comes to product evaluation, beauty lies in the eyes of the cardholder,” said Promothesh Chatterjee
, assistant marketing professor at the University of Kansas School of Business.
While this newfound relationship between cash and emotions has significant implications on consumers’ purchasing behaviors, it also could prove a plus for businesses. If consumers place more value on purchases made with cash, retailers can benefit from the related perception of their products and, in turn, strive to increase cash usage in their stores. So, for retailers, too, and not just their customers, a psychological attraction to cash can be powerful.
Carl R. Osterlof
Senior Vice President
Financial Institution Enterprise Sales & Relationship Management Team