The pain of paying

The pain of paying

It’s never a pleasant feeling having to part with our hard-earned money. However, spending can be more or less painful depending on the payment method. By using a contactless card, for example, you can disassociate yourself from the payment, removing any negative emotion and enabling yourself to take more enjoyment from your purchase. This is a behavioural concept commonly known as the ‘pain of paying’[i] and has a significant impact on modern spending habits.

We spoke to Professor Darren Duxbury from the Newcastle University Business School, and the Behavioural Research in Finance (BRiF) group, to understand more about the pain of paying theory. He explained thatas well as economic value, money also has social and psychological value.” When we’re making a payment by card, although we may be conscious about the economic value of the exchange, the psychological and social worth is not as prominent. As a result, “the absence of such emotive ties makes it easier to spend, in part perhaps, because the cost of consuming is simply the economic value of the money exchanged.”

We recently carried out a survey[ii] which revealed nearly a third of people admit they need more control over their personal finances. However, rapidly evolving technology is simplifying the methods of payment, making it easier to spend, harder to budget and making it difficult to maintain control over our finances.

What affects the pain of paying?

The pain of paying can be influenced by two factors: The timing of payment and the type of payment.   

Timing of payment

Type of payment

The pain of paying is reduced when there’s a period of time between when the purchase is made and when the money actually leaves your bank account. For example, when you pay on your credit card, and the bill comes weeks later.

It’s significantly more tempting to splash out and treat yourself when you know the pain of the paying will be delayed.

The physical act of handing over cash also greatly increases the pain of paying – compared with paying on a card, where the transfer of money is less tangible.

This is because the longer the process or the more difficult the transaction, the more you’re aware of exactly how much of your money you’re parting with.

Our research exposed that a large proportion of people experience a range of negative feelings when thinking about their finances:

  • 22% feel worried
  • 21% feel stressed
  • 18% feel nervous
  • 10% feel overwhelmed

In an attempt to avoid these negative emotions people often adopt a ‘head in the sand’ attitude. This encourages a habit of using methods of payment that actively reduce the pain of paying. If you’re less likely to feel worried or stressed, about making a payment, you’re more susceptible to spending more often.

The rise of contactless cards 

The introduction of contactless cards has become one of the most widely implemented changes to impact the pain of paying. First introduced in 2007, the success of contactless resulted in the limit per transaction being raised to £30 in 2015.

According to The UK Card Association, as of January 2016, 81.5m contactless cards were in issue in the UK. Richard Koch, Head of Policy at the association, stated that "consumers are making more than twice as many card payments every day than they were 10 years ago." This has had a positive effect on businesses as consumers are more likely to make small spends - with more and more supermarkets and retailers now offering contactless payments at their tills. Shops are experiencing reduced queue time, an ability to serve more shoppers at busy times, as well as giving customers a quicker and easier shopping experience.

However, it’s not having the same effect on our bank balances and savings pots as consumers. Our survey found that one in 10 people don’t always pay attention to prices. A contactless transaction is an almost pain-free payment which can feel like we haven’t parted with any money at all. Professor Nicole Robitaille, Queen’s university, who has studied the phenomenon of the pain of paying states that, “when you reduce how much affective pain someone experiences, they’re more willing to spend”.

How else is the pain of paying being reduced?

Contactless cards aren’t the only payment technologies that have been developed to reduce ‘the pain of paying’:

  • Using secure online payment systems, such as PayPal and Sage Pay, makes online transactions even easier, as you pre-register your bank details so at the point of sale there’s no need to type out your card information.
  • Similarly, spending money via your phone apps also makes spending easier, as your account already holds your bank details. Some phones even allow you to make downloads, as well as paying for products and services, using fingerprint recognition, rather than needing to type in a password.
  • Purchasing items on credit or on finance could reduce ‘the pain of paying’, as the payments are made in small installments. You feel like the cost is less, even though the total amount is the same (if not more after interest).

What’s the impact of reduced pain of paying?

According to our survey, more than six in 10 people do not save as much as they’d like to. Spending methods that reduce the pain of payment can lead us to spending more freely and not taking note of all our expenditures. Regardless of whether it’s a big ticket purchase, like a holiday, or an ‘invisible’ coffee on your way to work, what is certain is that we’re spending more regularly. Understandably, this is having a knock on effect on our ability to budget and therefore is having negative consequences on our savings pots.

Our expert, Professor Darren Duxbury, notes that “saving for the future means forgoing spending today,” and “we know that people mentally account for time and money in different ways.”iii So, next time you reach for your contactless card, just remember that the pain of paying may have been reduced, but the price tag is still the same. Being mindful of how you’re spending your money, using cash where possible, will help to keep you from overspending.


i Rick, S. I., Cryder, C. E& ., Loewenstein, G. (2008). Tightwads and spendthrifts. Journal of Consumer Research, 34, 767-782
ii The research was run in consultation with Future Foundation and ICM. The findings are based on 5,000 online interviews among a nationally representative sample of UK adults aged 18 and above, carried out in February 2016 and analysed during February/ March 2016.
iii Duxbury, D., Keasey, K., Zhang, H., & Chow, S. L. (2005). Mental accounting and decision making: Evidence under reverse conditions where money is spent for time saved. Journal of Economic Psychology, 26(4), 567-580.


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