Will a mobile app remove The Pain of Paying?
Every time we pay for something we experience what is called “The Pain of Paying”. When we pay any amount of money we feel some psychological pain. This is associated with giving up our hard earned cash. But it also turns out that this pain does not increase linearly with the cost. This means that when we double the payment, the pain doesn’t double – it only increases by a bit. In fact, the biggest increase in the pain of paying comes when we switch from paying nothing to paying something. Which means if you dine out with your friends, to reduce the pain of paying as much as possible, you shouln’t split the bill, instead take turns each time you go out. “The Pain of Paying” is a mysterious behavior that economists long tried to solve.
The question now is, will smartphone payment apps like Square, help ease the pain of paying? They are one of many companies that developed a tool that turns your smartphone into a cash register. First, it moves the time of payment to the future. And they also make it into an opportunity for you to show that you are a regular at your local café, by sharing that update at the same time as you get your coffee. So instead of making small payments and feel the pain often, you can feel it less often and at the same time show off what you’re up to.
So, when will we start using mobile payment, and which one will be the big one?
The Pain of Paying