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Moving Up with Mobile Payments

A study finds consumers spend more when using mobile payment apps

Are mobile payment apps are the new credit cards? Perhaps. That’s one major takeaway from a study that found payment apps encourage consumers to spend more. This forever links them to credit cards, in that previous research has shown that you tend to spend more when using plastic instead of good old fashioned cash.

For the report, researchers at the University of Illinois at Urbana-Champaign studied consumers in China and their use of the mobile payment app Alipay. The team chose China because of how prevalent mobile payments are. As Marketwatch reports, one survey found that in some cities in China, mobile wallets are the preferred method of payment — above cash and even credit cards. The researchers found that once consumers started using mobile wallets, their total expenses increased by 2.4 percent and the total number of retail transactions increased by 23 percent. The report also found that consumers tended to use mobile payments on smaller transactions, more often. The reason was that just like with credit cards, mobile payments make things easier for consumers. “It’s the future of how consumers will pay for small-ticket items, which means you will see fewer and fewer people carrying actual, physical credit cards in the coming years,” study co-author Yuqian Xu explained to Marketwatch.

Much like credit cards, the convenience that mobile payments provide can be a double-edged sword. It’s great that they make your life easier, it’s not so great that they can lead you to spend more than you should. If you’ve been using mobile payment apps, try tracking your spending a few months actively choosing them and a few months not. If you tend to spend more when using the apps, try deleting them from your phone. A little “out of sight, out of mind” can be a good thing for your budget.

Chris O'Shea

Chris O'Shea