Cash or Card: Consumer Perceptions of Payment Modes - Scholarly ...

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1.1: Overview Chapter One Introduction In 1979, Hirschman lamented the lack of research in the area of payment mode effects on point of sale purchase behaviour. She suggested that this lack may be due to the assumption that there are no significant differences among payment systems and that even if there were; the differences did not affect purchase behaviour (Hirschman, 1979:58). In 2006, Schreft noted that the situation had not changed. However the topic has not been totally ignored as there are studies that examine the effect of credit card use compared to cash; these studies indicate that credit card use, when compared to cash, increases the overall amount spent per transaction (Hirschman, 1979; Feinberg, 1986; McCall and Belmont, 1996; Prelec and Loewenstein, 1998; Prelec and Simester, 2001; Soman, 2001; 2003; McCall, Trombetta, and Gipe, 2004; Raghubir and Srivastava, 2008). Prelec, Loewenstein, Simester, and Soman, propose that the increased spending behaviour is due to a ‘decoupling’ effect; the idea being that electronic payment modes lack transparency so that the actual cost of the transaction is obscured. Some researchers also suggest that consumers experience psychological pain when parting with cash. The explanation being that the physicality of cash creates an acute awareness that something of value is being transferred (Prelec and Loewenstein, 1998; Raghubir and Srivastava, 2008; Soman, 2003; Thomas, Desai and Seenivasan, 2011; Zellermayer, 1996). Two aspects of these studies limit our understanding of this phenomenon. One is that the studies focus on the use of credit cards and the other is that the only emotion recognised is the experience of psychological pain- pleasure. This means that the outcome of using personal savings as opposed to borrowed money when using an electronic payment is not fully explored. Also, by focusing on pain-pleasure, the possibility of other cognitive and emotional associations is overlooked. The purpose of the study is to examine the cognitive and emotional associations that people have with payment modes, particularly cash and debit card and to ascertain if and how these associations impact on payment mode choice and how 1
the payment mode selected impacts on purchase behaviour. The intent is not to assess the emotions actually experienced in a ‘real-time’ event but to ascertain perceptions of payment modes that will provide insight into possible cognitions and emotions experienced when paying for transactions that may influence such experiences. 1.2: Background Although researchers attribute the difference in purchase behaviour to the opacity of the non- cash payment mode, because the comparisons are across cash and credit card use, we do not know if the behaviour is a result of the physical characteristics of the payment mode or the access to credit. There is some evidence that payment mode characteristics may be a factor. Soman (2001, 2003) found that the use of prepaid cards (integrated circuit cards, ICC, usually referred to as ‘smart cards’) increases the amount spent per transaction. However because the money is transferred so it can used for a specific purpose there may be an awareness that the money is ‘spent’. Thaler (1985; 1999) and Gourville and Soman (1998) explain this phenomenon as pseudo-sunk cost effect. Thomas et al (2011) using supermarket panel data, compared the purchase of unhealthy food items (they use the term ‘vice’ products), across three payment modes - cash, debit and credit card. They report that the purchase of vice products correlates (positively) with debit and credit card use and negatively with cash. However, a study by Klee (2004), also using supermarket panel data, found no difference in the number of items and total value of the purchases across debit and credit card payment modes. So whilst the physical characteristics of the payment mode may also be a factor, evidence is varied. Although the credit card research assumes that when an electronic payment instrument is used, the sense of parting with something of ‘value’ is diminished, the studies do not specifically examine why. The implied understanding is that the associations people have with cash are different to those they have with electronic systems. Snelders, Lea, Webley and Hussein (1992) point out that although the concept of money is complex, the core of our interaction with money is as notes and coins and that their physicality imprints a psychological pattern in our minds and thus affects our behaviour. They recognise that coins 2
Page 1 and 2: Cash or Card: Consumer Perceptions
Page 3 and 4: Chapter Four: Research Design and M
Page 5 and 6: List of Figures Figure 6.1 Sree Plo
Page 7 and 8: List of Tables Table 6.1. Explorato
Page 9 and 10: Acknowledgement The research idea i
Page 11: Abstract This study examines the co
Page 15 and 16: Identifying the exact origin of anc
Page 17 and 18: 1.5: Study Locus and Context The av
Page 19 and 20: compare participants normal or pref
Page 21 and 22: Chapter 2 provides a critical revie
Page 23 and 24: 2.2: The Emergence of the Money Con
Page 25 and 26: commodity (bullion) and issued the
Page 27 and 28: 2.5: Payment Mode and Purchase Beha
Page 29 and 30: and Belmont (1996) found that resta
Page 31 and 32: Households’ Spending’ run by th
Page 33 and 34: students (n=37) were also asked to
Page 35 and 36: enefit of consumption and the assoc
Page 37 and 38: associated with the purchase of ple
Page 39 and 40: A number of explanations for how pa
Page 41 and 42: 2.6.5: Summary As this review of th
Page 43 and 44: Questions one and two are based on
Page 45 and 46: and label" events and occurrences,
Page 47 and 48: Thaler (1998) asserts that mental a
Page 49 and 50: If this is so then it is the transp
Page 51 and 52: The Chapter contends that the payme
Page 53 and 54: In this chapter, the methodology fo
Page 55 and 56: solid data, the issue of generalisa
Page 57 and 58: the experience. To do this requires
Page 59 and 60: as participants managed to link the
Page 61 and 62: 4.4.2: Participant Selection There
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were initially examined via a test-
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set, in addition to the payment mod
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There are two major validity threat
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The Chapter commences by describing
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of all three projective tests. A fu
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However the negative thoughts diffe
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cold. It seems that money in the de
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thought the shoe (that was linked t
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Exhibit 5.6: Summary of findings $2
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denominations ($5, $10). On the oth
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Emotions (see Exhibit 5.7g) The mos
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� It is just when I can hear coin
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� I don’t feel that when I see
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Exhibit 5.7 (c) LIQUIDITY � if I
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Exhibit 5.8. Quotes for PMP Scale.
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82 Using cash to pay for purchases
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84 Using a debit card to pay for tr
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` 86 If I had a $20 note in my wall
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88 Chapter Six Development and Vali
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latent variable determines the obse
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oot (sqrt) was applied to normalize
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Exploratory Factor Analysis reveale
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96 Table 6.2: Inter-Item and Item-t
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98 Exhibit 6.5: 49 Item Scale in Pr
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6.4.2: Pre-Test Two - Internal Cons
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The 45 items were examined to facto
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6.4.4: Pre Test Two - Final Factor
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6.4.6: Assessing Construct Validity
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used to measure individual construc
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110 Exhibit 6.9: Pre-Test Items Rem
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Table 6.14: Summary of Final Result
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All dimensions (Table 6.16) show AV
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7.1: Chapter Overview 116 Chapter S
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Four product categories of househol
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Since the use of cash and debit car
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7.4.1.2: Control Group-Test Groups
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7.4.2: Proposition Two Evaluation T
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126 Table 7.8: Indulgence Food Prod
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128 Exhibit 7.2: Proposition Two: E
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130 Table 7.12: Comparisons of Fact
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Proposition Two that- where consume
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Table 7.13: Mean Item Score: Field
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Research Question One: Do the cogni
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token is used, perceptions and beha
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would spend it on something special
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8.4: Methodological Contribution Th
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144 � The priming regarding the s
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it may be prudent for governments,
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Bechara, A., & Damasio, A. (2005).
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Carruthers, B., & Babb, S. (1996).
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Dohrenwend, B. P., Itzhak Levav, P.
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Garcia-Swartz, D., Hahn, W. R., & L
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Hair, J. F., Black, W. C., Babin, B
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Kassarjian, H. H. (1977). Content a
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Loix, E. Pepermans, R. Van Hove, L.
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Nielsen Research (2011, August) Nie
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Reimann & Bechara (2009) The somati
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Singh (2004) Impersonalisation of e
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Trent, J. & Smalley, G. (1992) The
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Zelizer, V. (1994). The social mean
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its usage. This in turn points out
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Adam Smith proposed that money is s
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During the 1950s, researchers began
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use of borrowed money. The introduc
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Appendix 2: Projective Tasks- Workb
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TASK THREE For this activity you wi
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TASK SIX Shopping experience using
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Activity Two Tick five traits/chara
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Appendix 3: Moderator Guide When pa
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important. Individual opinions and
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192 Write few sentences describing
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Appendix 5: Projective Tests- Theme
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Appendix 7: Projective Tool (Debit
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