Over the past few decades, financial technology has revolutionized payments worldwide. It began in the 1950s, when the first plastic bank cards appeared, allowing people to make transactions without using cash.
In the 1970s, electronic money transfers appeared, since the 1990s, the spread of the Internet led to the emergence of e-commerce and online payment systems, since the 2000s, mobile payment systems and contactless technologies (such as NFC) have developed, then fast payment systems with payment by QR code and biometrics.
As a result, consumers have been able to make instant payments almost at any time. This has influenced consumer behavior, changing the way people perceive and interact with money.
The Paradox of “Invisibility”
When paying with cash, the physical transfer of money often causes a phenomenon called the “pain of paying”: these are negative emotions that people experience when making a purchase and paying for expenses. The fact is that the brain “does not like” losses and perceives them as more significant than receiving an equivalent benefit.
When handing over cash when paying for a purchase, a person sees and even feels how much money he is spending. The less cash remains in the wallet, the higher the mental “cost” of the next purchase for its owner. This “visibility” of cash payments serves as a deterrent, acting as a natural psychological barrier to overspending and encouraging people to make more thoughtful choices regarding purchases.
Modern forms of cashless payments, on the one hand, simplify the tracking of expenses through the transaction history. On the other hand, they are deprived of the tangibility inherent in the transfer of cash, and the payment process itself takes seconds. This makes expenses “invisible” to the brain, reducing or even eliminating the psychological “pain of payment.” Emotional detachment, in turn, contributes to higher spending, including impulsive spending.