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

A number of explanations for how payment mode affects purchase behaviour are offered,
however they are all linked to one - transparency. More specifically, that the lack of
transparency has a decoupling effect and this decoupling impairs our mental accounting
ability, reduces awareness of the cost and so reduces the ‘pain’ associated with paying.
Whilst transparency may well be a central factor, why it is a central factor is not explained.
Underpinning the notion of transparency, is the idea that electronic systems (and cheque
based payment - but to a lesser degree) lack transparency because they are not cash. Soman
(2003:174) writes “Consider payment by cash as the benchmark transaction. In paying by
cash, the payment is very salient in both physical form (i.e., it is easy to see that money is
being spent) and in amount (i.e., since cash has to be counted and given, the amount is
relatively memorable”. The implication is that how we relate to cash based and card based
tokens is different and this difference affects our perceptions and thus judgements. This
means that we need to consider the physicality of the tokens as an influencing factor.
That the physicality of money influences our perceptions and judgment is evident in the
‘Coin’ studies of the 1940s and 50s’. These are studies that investigate value and perceptions
and are bedded in the accentuation hypothesis (in relation to coins this theory suggests that
the stated value of a coin is related to the size). For example if a child is told to select a coin
that is worth 10c and one that is worth $1 and the value is not noted on the test coins, the
child will identify the larger coin as having a $1 value (Bruner and Goodman, 1947). In their
comprehensive review of these studies, Saugstad and Schioldborg (1966) conclude that the
studies provide evidence that children and adults tend to view valued objects as larger, with
children viewing large objects as more valuable than small objects. Similar work by Lea
(1981) found that pre-decimal British coins were remembered as larger than the identical
coins under their decimal form. Physicality effects are also evident in the denomination effect
research. This research shows that behaviour related to the spending of a single large
denomination compared to small (e.g., $5 to $100 bills) is different. One reason is that people
like to conserve their money in large notes so as to curb spending as there is a reluctance to
spend large denomination bills (Mishra, Mishra and Nayakankuppam, 2006; Raghubir and
Srivastava, 2009). Apart from the value-size factor in perception research, a study by
Burgoyne, Routh and Ellis (1999) found that people develop emotional links to their national
currency. Their study examined attitudes towards transition from a national currency to the
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