Tapping Out: The Effect of Contactless Payments on Expenditure Recall

Abstract

Different payment methods have been found to affect how much people spend and how well they are able to recall the amount spent, tendencies that have been attributed to differences in the pain of paying and payment transparency. We investigate whether these effects extend to contactless payments in two studies that measured the accuracy with which expenditures can be recalled. Study 1 measured expenditure recall immediately after a shopping trip, and found that contactless payments were associated with decreased accuracy of expenditure recall relative to cash, but not to PIN-verified payment methods, which had the highest expenditure recall error. In Study 2, participants were randomly assigned a payment method for one of their usual shopping trips. Those assigned to a contactless card showed worse expenditure recall than those assigned to cash or PIN-verified debit cards. The reported pain of paying did not differ between payment methods, nor did it relate to expenditure recall, either directly or as a mediator. We discuss how reduced expenditure recall may have important implications, as it may lead to larger issues in personal finance management.

Keywords: contactless payments, payment methods, personal finance management, expenditure recall, pain of paying