Paying with credit influences customers' buying habits

By Kathleen Winkler

Processing card payments may be costly. However, credit cards may influence your customers to spend more than they otherwise would, say psychologists.

That's because postponing the pain of a paying for a purchase by using a credit card inclines shoppers to focus more heavily on the benefits of a purchase rather than on the cost, according to a recent study published in the Journal of Consumer Research.

Researchers at the University of Kansas and the University of South Carolina found that when consumers pay for a product using a credit card, they are more likely to focus on the perceived benefits of the purchase, rather than on such cold hard considerations as costs, practicality and specific ways in which they might use the product.

Customers may focus more intensely on a product's superior features than on cost because credit cards allow them to "decouple" the product's features from the pain of payment, say psychologists.

Customers are also more likely to make impulse purchases using a card and less likely to mentally calculate the impact of the purchase on their bank accounts.

Debit cards have similar effects on consumer psychology. Not only are they similar in appearance to credit cards, they too numb the reality of paying for purchases. Cash, in contrast, tends to make consumers think more critically about what they buy.

In general, card purchases have a more abstract impact on consumers' psyche. According to recent studies, payments made by cards increase the chances that customers will choose higher-image products with brand names more closely associated with quality versus lower cost substitutes.

This creates an opportunity not lost on marketers looking to drive sales, said Art Markman, a professor of psychology and marketing at the University of Texas at Austin, in an interview with CreditCardGuide.com. "For a marketer to make this strong association for you of paying with a credit card and buying luxury goods, what the marketer is doing is making it feel more fluent for you to make these kinds of luxury purchases with credit cards," said Markman.

See related: Small dollar debit card transactions have become pricy to process

Published: December 27, 2011