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Cash is King: The surprising truth about spending habits in a cashless world

University of Surrey: “In a paper published in Qualitative Market Research, researchers detail as cash fades from our wallets, so too does our awareness of spending, leading to impulsive and unnecessary purchases. The study suggests that maintaining a physical element in our payment systems may be vital for promoting responsible spending behaviours.  Dr Jashim Khan, Associate Professor of Marketing and Director of International Business Management and lead-author of the study at the University of Surrey said:  “The visceral nature of cash—its smell, feel, and the act of counting it—creates an emotional connection that digital payments lack. “When we handle cash, we are not just spending money; we are parting with a piece of ourselves.”  The research team conducted their study in two different cultures, and at very different times— New Zealand in 2013 and China in 2023. They used focus groups and open-ended questionnaires to gather rich, detailed data about consumer experiences with cash and cashless payment methods. Participants were asked to describe their feelings and behaviours surrounding the use of different payment modes. They found that cash promotes heightened awareness of spending, while cards and apps often lead to a disconnection from the money being spent.  While 50% of transactions in China are made through app-based payments, participants expressed a diminished sense of ownership over their finances. One participant noted, “Digital money doesn’t feel like spending your own money; there is no concept of money, but cash is different; it always feels like your money is decreasing when you use it.” This sentiment echoes across both studies, underscoring the emotional weight that cash carries compared to its digital counterparts.  The research also found that while people feel happy and secure using third-party payment apps, they sometimes struggle with a sense of loss when parting with cash. Emotional responses to cash transactions include sadness and guilt, reflecting a deeper psychological connection to physical money. In contrast, the ease of digital payments often results in mindless spending, as the tangibility of cash is replaced by abstract numbers on a screen…”

Also note: At the farmers markets for example, paying with cash saves the sellers expensive credit card transactions fees. I pay with cash as often as possible, and tip in cash.

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