Mobile Payments Can be Hazardous to Your Holiday Economic Health
Chances are, most of you out there have at least begun your Christmas shopping. Hanukkah shopping is pretty much done at this point since Hanukkah’s half over, though there’s still Kwanzaa afoot. Some of you are even done, so it’s a good time to compare your figures between this year and last. The University of Illinois at Urbana-Champaign, meanwhile, took a look at the impact of mobile payments and holiday shopping, and what it found is downright staggering.
Interestingly, the study focused on China, where mobile payments are a much bigger part of the equation than they are in other places like the United States. Mobile payments are present, but they’re nowhere near the size, percentage-wise, of the market in China. Yet even in China, it became clear that mobile payments are connected to higher spending.
After the adoption of mobile payments, the study found, consumers spent an average of 2.4 percent more, and total retail transactions were up over 23 percent. This was mainly due to consumers buying lower-priced goods more often. Even as mobile payments rose, credit card spending dropped 3.9 percent, and online spending was up “slightly” after Alipay came in.
Customers were more likely to spend in several categories, including travel, food and entertainment, but spending on healthcare and education remained static. The study is echoed elsewhere, as those with an Amazon Echo actually spent $400 more per year on average, as compared to just $1,300 for those on Amazon Prime.
The problem with this study is trying to generalize Chinese culture to the rest of the world. China has long eschewed the credit card, having a cultural more against debt in general. That’s changed in recent months, however, as more households take on debt. Still, it does connect to an old principle about users feeling detached from physical money using mobile payments, so it’s not out of line to say that those who use mobile payments spend more as they don’t “feel” the loss the way they might with cash.
So if you’re shopping with mobile payments this year, make a more concerted effort to not only budget, but also stick to that budget. Christmas can be a great time, but going into debt over it is a step too far.