Could Contactless Payment Mean A “Debt Storm” Ahead?

It’s not the first time that someone’s suggested that making payments online or paying bills online—or by extension, by mobile device—leads users to spend more than normal because the pain is removed from the process.

Now, word is coming from London Business School that suggests this could be happening, on at least some end.

The London Business School study noted that paying for things via cash interjected a “brake on spending,” a kind of psychological pain point as customers physically removed something of value from wallets or purses and handed it over in exchange for something else.

Mobile payments, particularly contactless payment systems, provide a kind of “instant gratification,” reports note, that may lead to increased spending.

Throw in the temptation to overspend that so often comes with Christmas and the end result is a potential “debt storm” that could do some serious damage to pocketbooks and household budgets worldwide.

With credit card debt on the rise in the UK and beyond, it could be that the increases in contactless and mobile payment systems could help make what’s seen as a bad situation that much worse in the end.

It’s a bit of an oversimplification to suggest that mobile payments will make people spend more, or more specifically, spend to dangerous levels of indebtedness.

One, we already had that sort of thing going on to begin with—people were overspending for Christmas in the 1980s and even earlier—so to pin the blame on a psychological barrier removed by mobile payments is a smidgen disingenuous.

However, it could possibly make bad situations worse. To say that mobile payments are a cause of overspending is a lot like blaming guns for murder; the gun never actually killed anyone.

The mobile payments system isn’t doing the spending. In both cases, it’s the individuals behind the systems that are the problem, not the systems themselves.

Like any powerful tool, we have to be careful about how we use these things. The solution is not some kind of rule imposed from without but rather a self-determination that says we won’t overspend, we won’t go shooting people, and we won’t use power drills improperly. Mobile payments can be a valuable tool in our lives, but we must be careful about how we use these.