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How does mobile payment technology influence consumer behavior?

· 14 min read

A synthesis of Paul Spieker’s bachelor thesis.

Abstract

Every new way to pay has changed how people buy. Decades of behavioral finance research show that credit cards make consumers spend more, decide faster and hold back less. This literature review asks whether that effect carries over to mobile payment. It organizes the evidence along three factors that build on one another: the pain of paying, willingness-to-pay and negative financial behavior. The evidence largely points one way. Paying with a phone lowers the felt cost of a purchase, raises what consumers are willing to spend, and is associated with impulse buying and costly credit behavior. The review also identifies where the effect weakens or disappears: in online experiments, among non-adopters, and outside the United States.

Why the form of payment matters

Shekels, gold coins or credit cards: innovation in payment systems has historically reshaped commerce and consumer behavior with every iteration. New payment technologies redefine the way buyers and sellers complete transactions, online and offline, and with it the way purchasing decisions are made.

The best-documented case is the credit card. It offered a faster, more convenient way to pay without handling physical cash (Raghubir & Srivastava, 2008), and behavioral finance has studied its consequences since the 1970s. The findings are consistent: credit cards lead to larger purchases and overspending (Hirschman, 1979; Prelec & Simester, 2001) and to faster purchase decisions (Feinberg, 1986).

Mobile payment through Apple Pay, Samsung Pay and Google Pay has once again changed the speed, ease and convenience of paying (Flavian et al., 2020; Liu et al., 2020). Paying with a smartphone feels even further removed from handing over cash. Adoption has grown significantly worldwide (Lebow, 2021), and fear of virus transmission during the pandemic accelerated the shift to contactless payment (Shearman, 2020). Whether the established credit card effect extends to mobile payment is therefore more than an academic curiosity: as more consumers adopt it, the answer shapes how millions of people spend.

The question matters on several levels. Academically, it sits at the intersection of finance, economics, psychology and technology, in a field that is still young and has clear research gaps. For consumers, understanding how a convenient payment process influences spending supports better-informed financial decisions. For companies, it explains how the payment options they offer affect their customers. For policymakers concerned with consumer protection and financial literacy, it touches the stability of household finances in an increasingly cashless economy.

The question guiding the thesis:

How does the adoption of mobile payment technology influence consumer behavior?

Approach

The thesis is a literature review. Sources came from the Maastricht University library database and Google Scholar. Keyword searches with an emphasis on peer-reviewed work and substantial co-citation produced a preselection of more than 50 articles, from which the final set was reviewed systematically. Because the field is young and the literature limited, the review takes a global perspective and focuses on the individual consumer and real purchase decisions.

The evidence is organized along three interrelated factors that capture the most important criteria of consumer behavior and build on each other in sequence. How painful a payment feels shapes how much a consumer is willing to pay, and willingness to pay in turn shapes whether spending turns into problematic financial behavior.

  1. 01Pain of payingHow much parting with money hurts
  2. 02Willingness‑to‑payThe highest price a buyer accepts
  3. 03Negative financial behaviorWhen spending turns costly
Figure 1 Review framework: three factors of consumer behavior, each building on the one before. Select a factor to jump to its section.

Throughout, mobile payment is contrasted with cash, the baseline, and credit cards, the most-studied alternative. What the literature had established before mobile payment fits in one table. Its right-hand column is the gap the thesis set out to fill.

Effect on consumersCashCredit cardMobile payment
Pain of payingBaseline LowerSources: Zellermayer (1996); Soman (2003)?
Willingness-to-payBaseline HigherSources: Hirschman (1979); Feinberg (1986); Prelec & Simester (2001); Raghubir & Srivastava (2008)?
Negative financial behaviorBaseline HigherSources: Hirschman (1979); Feinberg (1986)?
  1. 1Zellermayer (1996)
  2. 2Soman (2003)
  3. 3Hirschman (1979)
  4. 4Feinberg (1986)
  5. 5Prelec & Simester (2001)
  6. 6Raghubir & Srivastava (2008)
Table 1 Consumer effect of payment methods, as established before this review. Cash is the baseline; the mobile payment column is the open question. Hover a cell to see its sources.

Defining mobile payment

Mobile payments, mobile banking, e-wallets and related terms are consistently confused with one another, which makes a clear taxonomy important. Following Pousttchi (2004), mobile payment is defined as payment processing in which the payer uses mobile communication techniques together with a mobile device, such as a smartphone, to initiate, authorize and complete the payment. In most European countries, near field communication (NFC) and SMS make the process seamless (Au & Kauffman, 2008). The method became broadly accessible once Apple, Samsung and Google integrated it into phones and smartwatches. A typical case: paying for groceries at an Albert Heijn (a Dutch supermarket chain) self-checkout with an iPhone and Apple Pay.

01 · Pain of paying

Zellermayer (1996) introduced the “pain of paying” to capture the emotional side of transactions alongside their economic criteria. The concept assumes that individuals feel a negative emotion when parting with money, comparable to physical pain. That pain has a function: it is the force that counteracts the motivation to acquire a good or service.

Soman (2003) tied the pain of paying to payment transparency, the degree to which a financial loss is felt as it happens. In field experiments in a supermarket, reduced transparency consistently led to higher consumption. Transparency depends on two kinds of salience. The salience of form is how vividly consumers experience that money is being spent; the salience of amount is how aware they are of the specific quantity. Understanding how each payment method affects both is the key to estimating how much a payment hurts.

Cash is the most transparent. The payer touches the currency, counts bills and coins and receives change, which makes both form and amount highly salient (Soman, 2003). Credit cards remove the physical exchange. The payer gives up no belonging, keeps the card after the transaction and does not count out the amount, and paying is simply easier than with cash (Hirschman, 1979). Both kinds of salience drop, and with them the pain of paying (Falk et al., 2016; Soman, 2003).

Mobile payment goes one step further. The phone is a multi-purpose device rather than an object whose sole use is payment, and people are emotionally attached to it, which lowers transparency further (Pisani & Atalay, 2018). No coins are counted and no card changes hands; a gamified confirmation sound closes the transaction. The phone is usually closer at hand than a wallet, making mobile payment markedly more convenient than cash or card (Dahlberg et al., 2015). The stronger disconnect from form and amount means an even lower pain of paying (Falk et al., 2016).

CharacteristicCashCredit cardMobile payment
Salience of formHighMediumLow
Salience of amountHighMediumLow
Payment transparencyHighMediumLow
Table 2 Characteristics of payment methods. Falk et al. (2016), p. 2419.

Pisani and Atalay (2018) found supporting evidence by surveying how much pain respondents felt across scenarios and payment methods. Mobile payment was not only less painful in general; personal attachment to the phone was itself linked to lower pain, and the same moderating effect appeared for smartwatches with mobile payment built in.

Wang et al. (2022) went further and proposed that mobile payment does not merely reduce pain but induces a “pleasure of paying”: a positive emotion derived from anticipating the purchase, which creates a motivational pull toward buying. Using electroencephalography (EEG) to measure electrical activity in consumers’ brains, they found lower values for pain of paying with mobile payment and higher values for pleasure of paying. Crucially, lower pain alone was not enough to explain the higher purchase intention. Only the combination of less pain and more pleasure was. That distinction reframes the question: mobile payment does not only loosen a brake on spending, it adds an accelerator.

02 · Willingness-to-pay

Willingness-to-pay (WTP) is the highest price a buyer is willing to pay for an extra unit of a good (Acemoglu et al., 2019). It is a fundamental indicator of the value people attach to goods and services. Here, it measures how a payment method shifts perceived value and spending. Extrapolating the credit card effect to the design of mobile payment, WTP should rise further still (Falk et al., 2016).

Falk et al. (2016) tested exactly that. Mobile payment not only lowered the perceived pain of paying but also produced a lower store price image and a higher overall WTP. In an in-store experiment, 200 adults simulated real-world shopping with cash, credit card or mobile payment, representing high, medium and low payment transparency (Soman, 2003). Card payers valued the same basket 7% higher than cash payers; mobile payers valued it 10% higher. The further 3% over credit cards supports a clear chain of cause and effect: lower transparency at checkout leads to more favorable price judgments, and those in turn to a higher WTP.

0 €10 €20 €30 €€26.14€28.02€28.68Cash paymentCard paymentMobile payment
Figure 2 Mean basket value at checkout by payment method. Adapted from Falk et al. (2016), p. 2422. Hover or tap a bar to compare it with cash.

Liu et al. (2020) refined the picture by asking where the money came from. Participants read purchase scenarios and bid up to 150 yuan, with the budget framed either as earned income or as money given by their parents. Mobile payment again produced a higher WTP than cash, but only for earned money: consumers spent 18% more of their personal income with mobile payment than of a gifted budget. With cash, the pattern reversed, and people spent more of the gifted budget.

¥0¥40¥80¥120¥82.39¥98.77¥89.59¥83.91Earned incomeGifted budget
Figure 3 Mean bid value by payment method and source of budget. Cash payment Mobile payment. Liu et al. (2020), p. 516. Hover or tap a bar to compare it with cash.

The explanation connects back to the first factor. Losing money obtained through one’s own effort hurts significantly more (Liu et al., 2020), so mobile payment’s painkilling effect matters most exactly where the pain is greatest: on work income. Liu et al. also held physical effort constant, requiring the same number of clicks for every method, and still found faster decisions with mobile payment. The difference, they concluded, is cognitive. The convenience of mobile payment lowers cognitive load, and lower load promotes spending and a higher WTP.

Convenience is the focus of Boden et al. (2020), who did not find a lower pain of paying for mobile payment and therefore looked for other drivers. Besides the subconscious effect of pain, consumers value the utility of the payment process itself, such as faster completion (Feinberg, 1986); they would rather swipe a card than search for coins (Hirschman, 1979). Mobile payment proved more convenient than both, particularly for people with an affinity for technology. The conclusion cuts both ways: convenience can raise WTP for adopters and lower it for non-adopters who are unfamiliar with the process. An older consumer without technological affinity gains none of the convenience.

Not every study confirms the effect. Liu and Dewitte (2021) could not replicate the credit card effect, or any substantial influence of mobile payment on spending, in a predominantly online experiment, even though they measured lower pain of paying and higher convenience. The result raises the question of how physical and online purchasing differ, and how much online surveys can capture. The authors suggest that location, cultural factors such as individualism and long-term orientation, and how widely businesses accept mobile payment all shape the measurements.

For many people, security and privacy risks are also a barrier to adoption (Eriksson et al., 2021). The contrasting results underline how much context matters. And given how strongly convenience drives continued use (Kim et al., 2010), they lead to the next question: whether mobile payment adopters are more inclined to decide on emotion and impulse.

03 · Negative financial behavior

A higher WTP does not by itself imply financial misbehavior. The third factor looks at decisions that actually burden households: overdrawing accounts, over-the-limit fees, difficulty covering expenses and compulsive spending (Meyll & Walter, 2018). Because mobile payment’s convenience can lead to purchases made without deliberation (Boden et al., 2020; Liu et al., 2020), impulse spending is the natural place to start. Impulse buying is a spontaneous, high-speed decision made without scrutiny of details or options. It is not the rational choice economic theory assumes, but a purchase decided on the spot and with excitement (Maymand, 2012).

Garrett et al. (2014) analyzed a survey by the U.S. Department of the Treasury and the President’s Advisory Council on Financial Literacy, with fifteen thousand respondents from all 50 states. Mobile payment adopters were predominantly young, educated and familiar with mobile technology, and they valued convenience highly. They were also more likely to engage in impulse spending, and later work found mobile payment users to make more hedonic purchases (Yu et al., 2023). Both are plausibly encouraged by fast completion and low payment transparency (Falk et al., 2016). Garrett et al. were careful about causality: their design could not tell whether mobile payment changes behavior or simply attracts people who already spend impulsively. Hellemans et al. (2022) segmented adopters by socio-demographics and found that the group most likely to adopt mobile payment is also the group most at risk of impulse spending: young people with high technological affinity and heavy exposure to social media marketing.

Meyll and Walter (2018) measured misbehavior directly, on the credit card linked to the smartphone. Using data on more than 25,000 U.S. households, they compared making only the minimum payment, charging over the limit and paying late fees between adopters and non-adopters. They found strong associations between mobile payment adoption and costly credit card behavior, and more frequent mobile payment use was associated with growing debt. Their regressions controlled for financial literacy and risk tolerance, ruling out the most obvious confounders.

Liao and Chen (2020) profiled U.S. adopters around financial literacy and found the same risks: overspending, overdrawn checking accounts and high-cost borrowing, together with a link between lower financial literacy and heavier mobile payment use (see also Ahn & Nam, 2022). In a follow-up study, the probability of positive financial management fell as mobile payment use rose, and the negative effects replicated (Liao & Chen, 2021). Consumers need to understand the mechanics of the payment method they use in order to resist its subconscious pull toward misbehavior.

Europe tells a different story. Seldal and Nyhus (2022) also found people with lower financial literacy at greater risk of problematic financial behavior, but could not establish a causal link to mobile payment. Their results directly contrast those of Meyll and Walter (2018): women appeared more prone to financial misbehavior, mobile payment use correlated positively with financial literacy, and adopters were found to be less financially vulnerable. The contrast raises a real question about how far national findings generalize to a global technology.

The completed picture

Filled in with the evidence, the table from the start of the review reads:

Effect on consumersCashCredit cardMobile payment
Pain of payingBaseline LowerSources: Zellermayer (1996); Soman (2003) LowerSources: Falk et al. (2016); Pisani & Atalay (2018); Wang et al. (2022)
Willingness-to-payBaseline HigherSources: Hirschman (1979); Feinberg (1986); Prelec & Simester (2001); Raghubir & Srivastava (2008) HigherSources: Falk et al. (2016); Liu et al. (2020); Boden et al. (2020)
Negative financial behaviorBaseline HigherSources: Hirschman (1979); Feinberg (1986) HigherSources: Garrett et al. (2014); Meyll & Walter (2018); Liao & Chen (2020); Hellemans et al. (2022); Yu et al. (2023)
  1. 1Zellermayer (1996)
  2. 2Soman (2003)
  3. 3Hirschman (1979)
  4. 4Feinberg (1986)
  5. 5Prelec & Simester (2001)
  6. 6Raghubir & Srivastava (2008)
  7. 7Falk et al. (2016)
  8. 8Pisani & Atalay (2018)
  9. 9Wang et al. (2022)
  10. 10Liu et al. (2020)
  11. 11Boden et al. (2020)
  12. 12Garrett et al. (2014)
  13. 13Meyll & Walter (2018)
  14. 14Liao & Chen (2020)
  15. 15Hellemans et al. (2022)
  16. 16Yu et al. (2023)
Table 3 Consumer effect of payment methods, including mobile payment. The open column from Table 1, filled in by the evidence.

Adopters sense a greater disconnect from the payment process and from the negative feeling associated with spending money. As a consequence, they are prone to spend more often and in greater amounts. Quick accessibility and less mental strain provoke impulse buying, and the change in spending patterns raises the probability of overdrawn accounts and fees. The individual less familiar with personal finance and innovative technologies is particularly at risk of being subconsciously influenced. Businesses and financial intermediaries, meanwhile, gain from greater basket values and transaction frequencies.

Limitations and further research

Most mobile payment research has examined why people adopt it, using technology acceptance and usage models to inform system design (Garrett et al., 2014; Ahn & Nam, 2022). This review concentrated on the less-researched question of what happens after adoption. That leaves room for significant further work, and the synthesis has limits worth stating:

  • Location. The effects depend on local payment infrastructure (Boden et al., 2020) and social norms (Garrett et al., 2014), which differ widely not only between nations but within them. A thematic framework suits a globally developing technology, but regional differences may be driving the findings.
  • Setting. Real-world studies and laboratory or online experiments measure different things. Retail context is already known to shift spending (Eriksson et al., 2021), without clear insight into its effect on measures such as WTP.
  • Technology. Mobile payment is not one thing. Differences between Apple’s and Samsung’s systems, or between a phone and a smartwatch, may each shape how consumers perceive a payment.

Future research should favor field studies over surveys and laboratory experiments, with an emphasis on how cultural and situational factors interact with mobile payment and how national spending patterns compare globally. Contrasting concrete retail environments would reveal which purchasing decisions are most prone to influence. Building on evidence that mobile payment raises WTP and thereby the firm value of companies that offer it (Pasirayi & Fennell, 2022), research can turn toward actionable strategies for businesses. Gender differences, highlighted by Seldal and Nyhus (2022), deserve more specific investigation.

Implications

  • For businesses, mobile payment offers an implicit way to incentivize greater spending: customers perceive their basket as more valuable and pay more easily. Retailers can leverage this by advocating mobile payment in stores and online, which also speeds up checkout. Small local vendors may be able to differentiate themselves simply by offering it.
  • For consumers, it pays to understand how mobile payment can influence purchasing decisions by lowering the barrier to any purchase. Financial literacy is the counterweight, and it matters most for those already prone to irresponsible spending.
  • For regulators, the literature already shows how mobile payment can amplify risks to household financial stability. Encouraging field research like the studies proposed here would ground quality policy, including preventive measures where necessary.

The risks of mobile payment increasingly substituting cash and credit cards cannot be neglected. Yet the technology is a promising innovation and a momentous step toward an efficient cashless economy in the 21st century. The challenge is to keep its convenience without losing the small, useful pain that keeps spending in check.

References