There is a universal truth we must acknowledge. It’s easier to spend money if we never hold it in our hands. This is why people end up in serious trouble with credit cards even when they have wads of cash in their wallets. The “cashless effect” is a very real thing, and it benefits ecommerce sales in ways retail sales don’t experience. The question, of course, is why? Why do digital wallets, debit cards, and credit cards encourage spending?
Digital wallets make spending easier than ever. No digging through your wallet for exact change. No handing over the last bit of cash you have for those groceries you need. No punching in PIN codes or signing receipts. No confirming your purchase for the cashier. The fewer steps between want and own, the more likely consumers are to make a purchase.
Apple Pay and Amazon’s 1-Click purchasing both take advantage of this effect. Apple Pay has removed all the barriers between wanting and owning. The purchaser just has to wave his or her little gadget at the register, and the coveted items become theirs. On Amazon, one click is all a buyer needs to make a purchase and have that purchase delivered right to their homes. One click! There’s not even time to reconsider the wisdom of the purchase before the deal is done.
Out of Sight, Out of Mind
If you’re looking at your last five-dollar bill, you probably won’t buy that pack of gum. If, however, that five dollars is in your bank account, you’ll whip that debit card out or pay with your digital wallet without even thinking twice. There’s no pain or feeling of loss when we aren’t holding the money to begin with.
The less we know about how much money is left, the more likely we are to spend, spend, spend. The digital wallet, credit cards, and debit cards all serve this bias. Of course, without regular attention to the accounts, buyers could find themselves in serious trouble.
We’ve all seen the commercial of the man who’s supposed to be out shopping while his family organizes the surprise party. Of course, he finishes his shopping in record time and crashes the party plans. This kind of marketing touches on the very deepest of desires: to never miss out on anything ever again.
Consumers embraced debit cards over cash because of the speed with which they could complete their shopping. Ecommerce cut out the long lines and slow cashiers completely. Now, with the digital wallet, buyers get pretty much the best of all worlds. Even in line at the grocery store, the digital wallet works something like Amazon’s 1-Click purchasing—and without violating that patent, too.
How Does This Help?
The question, then, is how can you use this knowledge for your ecommerce company? If you can adopt a digital wallet payment agreement, go for it. If you’re still building your company, new payment options may not be possible yet. What you can do, however, is work to make the payment process as simple as possible. The fewer steps between want and own, the better off you’ll be.
Maybe an initial registration will take more time, but buyers will recognize the benefits. Upon return visits, even a two-step process will make buying easier. In the meantime, keep an eye out for any other technology or practices that remove even more friction from the buying process.