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

According to Frederick, Kahneman and Mochon, (2010) “Anchoring effects are said to be
easy to generate, but hard to explain” (p. 17). In the context of cash tokens the explanatory
difficulty may rest partly on the variety of psychological mechanisms potentially involved,
including numerical priming. In the case of denomination effects, the denomination value
(stimulus) may act as a focal point and trigger preconditioned responses. Studies by Mishra,
Mishra and Nayakankuppam (2006) and Raghubir and Srivastava (2009) demonstrate that the
likelihood of spending is reduced when an equivalent sum of money (e.g. $100 note) is
presented as a single note or as $20s as the subjects in the studies had specific cognitions
about the large denomination- the key one being a reluctance to spend in that one should save
a$100 whereas five $20 notes can be spent. They conclude that the physical nature of the
tokens serve to reinforce an experienced difference and thus affects our perceptions. By doing
so, the implication is that this process resonates with the principles underpinning the notion
of embodied cognitions.
In the case of payment modes, the characteristics of the physical entity used would produce
unique cognitions and emotions via touch, sight, counting and smell. These would differ
within and across the payment mode types. In that the denomination difference in the various
cash tokens would produce different interaction effects and effects that are different to those
experienced when a debit card is used. Embodied cognition has its roots in the work of
William James (1890) but received recent recognition due to the work of Gibson (1979) and
Lakoff and Johnson (1999). Underpinning embodied cognition is the notion that cognitive
dynamics are deeply rooted in the body’s interaction with the world. Anderson (2003)
explains that: according to Lakoff and Johnson the mind is inherently embodied because its
processes must be neutrally instantiated and because our perceptual and motor systems play
a foundational role in concept definition and in rational inference (p.105). Cognitive
embodiment has captured the interest of economists (see Bechara and Damasio, 2005;
Glimcher, Camerer, Poldrack and Fehr, 2008; Reimann and Bechara, 2009; Oullier and
Basso, 2010) and the concept is generating interest amongst consumer researchers (see the
Preconference on embodiment, ACR proceedings, 2010). Though not directly used to form
propositions, for this study, the relevance of cognitive embodiment lies in the premise that the
physical characteristics of the payment mode affects our perceptions; that these perceptions
differ across payment modes and this affects our behaviour when effecting transactions.
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