Is it time to ditch Apple Pay? People who use mobile payments are more likely to OVERSPEND, study finds
- The researchers analyzed the spending behaviors of 21,457 American adults
- Mobile payment users are 34% more likely to spend more than annual income
- They were also 31% more likely to have difficulty paying bills and expenses.
Either Apple Pay or Google Pay Many of us now use our mobile phones for contactless payments while out and about.
But a new study may make you reconsider using mobile payments.
Researchers at the University of Puget Sound in Washington have revealed that people who use these payment methods are more likely to overspend.
“Excessive spending through mobile payment may be related to the intangible nature of the transaction, along with its convenience, which allows the user to disconnect from the transaction,” said the researchers, led by Sun Young Ahn.
Researchers from the University of Puget Sound have revealed that people who use mobile payment methods like Apple Pay and Google Pay are more likely to overspend
How Britain became a nation of smartphone buyers
Smartphone payment methods such as Apple and Google Pay were used for more online purchases in Britain in 2020 than physical debit cards, a recent report has revealed.
So-called “mobile wallet” payments were used for just under a third of all online transactions in 2020, with debit cards used for 29 percent, according to payment processor Worldpay.
Cards were the most popular method for in-person purchases, accounting for 49 percent, with physical cash comprising just 13 percent of all payments and Apple Pay just 8 percent.
Mobile payment systems, including Apple Pay, Google Pay and Samsung Pay, are now very popular around the world, with 32 percent of all online purchases made through mobile wallets in 2020.
In the study, the researchers set out to understand how these technologies have affected spending habits.
“Despite the benefits of using mobile payments, there has been little research on the implications of how mobile payment use influences consumers’ financial behaviors,” the researchers wrote in their study, published in Computers in human behavior.
A sample of 21,457 US adults was included in the study, and their spending behaviors were analyzed.
The results revealed that 37 percent of the participants had used mobile payments in person or online.
The other 63 percent reported that they had not used mobile payments.
Preferred payment method seemed to have an effect on overspending.
Participants who used mobile payments were 34 percent more likely to spend more of their annual income than those who used other payment methods.
They were also 31 percent more likely to have difficulty paying bills and expenses.
Overall, mobile payment users also consistently scored higher on overspending behaviors, including a greater tendency to overspend, difficulties with money management, and poor credit card behaviors.
“The odds of outspending income, having difficulty meeting expenses or paying bills, paying a minimum payment, a late fee, and a credit card overage fee were significantly higher for users of mobile payments,” the researchers said.
While the reason for the findings remains unclear, researchers have several theories.
Participants who used mobile payments were 34 percent more likely to spend more of their annual income than those who used other payment methods (stock image)
First, like credit cards, mobile payments can allow people to avoid the pain of paying due to the outflow of intangibles.
Alternatively, the convenience of paying with your smartphone may influence overspending, according to the researchers.
“When credit card use skyrocketed in the 1980s, many researchers and practitioners noted that credit card use accelerated the likelihood, speed, and magnitude of spending due to the benefits of payment convenience.” , which promotes credit card overspending,” the researchers wrote.
“Use of mobile payments may have an even stronger convenience effect on overspending behavior, as consumers may perceive using mobile payments to be a more convenient method compared to using credit cards.”
The researchers hope that tech companies can use the findings to reduce the risk of people overspending on their platforms.
“The findings have practical implications for service providers in the mobile payment industry on how to design and develop interventions to reduce the adverse effects of mobile payment use among consumers,” the researchers concluded.
Apple could soon allow iPhones to accept contactless payments DIRECTLY without the need for any additional hardware, says report
Apple could allow iPhones to accept contactless payments directly without the need for any additional hardware “in the coming months,” a new report claims.
It would mean customers could tap their iPhone or debit card on the back of a retailer’s iPhone to pay at coffee shops, hair salons, food trucks and more.
Small businesses today require external terminals for the customer to touch their phone or card, such as the small white ‘Square’ device from Block Inc.
Apple’s new system will likely use the iPhone’s near-field communications (NFC) chip currently used for Apple Pay, according to the report.
The feature may even roll out via a software update in the coming months, potentially accessible through Apple Pay.