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Coffee tastes better when paid with cash

Categories : Cash is efficient
July 22, 2016
Tags : Banknote/Note, Card payments, Transaction, Usage
Professor Avni M. Shah carried out a behavioral study on people's perception of value when paying with cash versus digital payment methods.
Communication Team / Equipo de Comunicación

One day, Professor Avni M. Shah’s usual morning coffee tasted much better than usual: Having forgotten her debit card, she had to pay in cash for the first time. This triggered her to wonder whether paying with tangible money actually causes people to appreciate their purchases more.

She put her theory into practice though a behavioral study: one group of people were asked to buy a mug for $2 in cash while the other was allowed to use a card. Later, she required participants to sell their mugs back. To her surprise those that bought it with a card only asked for $3.83, while those using cash, wanted $6.71 on average.

She carried out a similar study, but with donations. Participants were given $5 that they could then give to charity. To thank participants for their donations, a ribbon to be worn on their lapel was offered in return. Interestingly enough, almost half of those that paid the donation in cash wore their ribbon compared to only 14% of those that used plastic.

Her studies have shown that payments though physical or tangible methods (cash as well as checks) result in a greater emotional attachment to the purchased good. Conversely, digital payments often cause over-consumption and result in less emotional attachment to the object and even the brand.

Professor Shah concludes that to increase brand loyalty, merchants should find ways to make digital transactions more memorable via buzzing noises or reminder emails – or simply encourage people to pay cash.

A similar article on the subject can be viewed here.

To read the New York Times article, click here.

To read Professor Avni M. Shah’s report, click here.