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Apple Pay has Warped our Perception on Money


Customer using contactless payment, Apple Pay, Google Pay, to complete a purchase

We have all heard of, if not used, contactless payments. Since the start of the COVID-19 pandemic, contactless payments became increasingly popular. This makes transactions safe, simple and efficient, but there remains to be concerns regarding the convenience of it all. Is the payment service subconsciously encouraging consumers to spend more?


Growing popularity of contactless payment

The rise of contactless payment was accelerated from the beginning of the COVID pandemic in 2020. According to Visa, 31 million Americans reported to tap a Visa contactless card or digital wallet in March of 2020. With the rising paranoia of catching the coronavirus, more people took precautions to avoid as much contact with others as possible. Business also took into considerations of health and safety guidelines imposed by the government. Contactless payment services were endorsed as it is cleaner and safer. In addition to the fear of COVID, contactless generally improves customer experience making shopping faster, efficient, and more convenient than ever before.

Contactless payments were limited to £10 in 2007 when it was initially introduced. As approved by the Financial Conduct Authority (FCA), it was increased from £45 in 2020 to £100 the following year. With the increased use of contactless payments by consumers, more stores gradually stopped accepting cash and switched to providing contactless options. The ease of transactions can stimulate money flow and economic growth as consumers spend more, benefiting many businesses. Despite the profits, there are still concerns from the consumer's viewpoint.


Customer paying using contactless, Apple Pay, and face recognition

Introduction of Apple Pay

With the new payment cap, there is an increase fear of fraud and people question the security of contactless payments. However, mobile bank systems such as Apple Pay resolve this concern of insecurity. Apple Pay was determined to make wallets obsolete when it first launched in 2014. This was an ambitious goal and investment for Apple, but it eventually paid off. In 2016, 10% of users were reported to activate the service and it has now reached 75% users globally. Apple Pay has the largest transaction volume compared to other services like Google Pay. This service is especially popular in the United States but is excluded in China. On top of that, over two billion people were reported using mobile payments in 2021. According to Apple's reports, 90% of retailers accept Apple Pay. As more businesses accept such services, an increased amount of revenue is generated, and more value is provided to the customers. This secure form of digital wallet allows consumers to leave their wallet and cards at home, simply paying with your phone, which is considered a necessity today. In a matter of seconds, a tap on the machine completes the transaction. Not only does this save time and space, but it also reliefs the burden of worrying about stolen credit cards.


Apple says the ultimate goal is giving users “the option to replace their physical wallet with a secure, private and easy to use mobile wallet.”

The psychological effects of Apple Pay

The convenience of Apple Pay, like any other service, has other effects too. In this case, a psychological one. Contactless payments already "take accountability away from consumers" causing people to easily lose track of their spendings. The absence of a physical transaction, whether it is handing over cash or putting in the PIN number for your card, results in a psychological change from consumers. Cognitive studies show that areas of the brain activate emotional pain when consumers spend their money. This negative and unpleasurable feeling is minimized with the use of contactless payments. There is no sense of loss or emotional pain when the process of paying is so simple.

"Contactless and mobile payments break the association between price and pain, encouraging consumers to spend more."

There is less hesitation in spending since it does not feel like your hard-earn money is leaving your account. With just a tap, you could mindlessly consume and lose track of how much you have spent. Furthermore, without a limit on Apple Pay, people are even more financially vulnerable to debt.


What next?

This is not to say you should not continue to use contactless payments like Apple Pay. These payment services stimulate economic growth and create a satisfying, efficient customer experience. However, as consumers, we should be more mindful and aware of the psychological effects it has and the potential damage it can cause. It is important to recognize this behavior change, budget your money well, and think carefully before you go on a shopping spree next time.

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