What’s in YOUR Wallet?


Credit vs Cash
How you pay – credit card vs. cash – actually affects how you think about the products you are buying, according to new research published in the Journal of Consumer Research. That, in turn, means that marketers need to review how they are marketing to credit and cash customers. Although it’s been a maxim in the retail business that credit card customers are more free spending than cash customers due to the reduced pain of paying (not to mention availability of funds), the new study finds that the two payment methods are accompanied by a very different product focus. Specifically, credit card customers focus on the benefits that the product will deliver, while cash customers pay more attention to the product’s price, including related topics like delivery time, shipping and installation costs, etc.

As described in Do Payment Mechanisms Change the Way Consumers Perceive Products, researchers Promothesh Chatterjee and Randall L. Rose primed subjects with either credit card or cash cues, and exposed them to product information. They then tested the subjects to see what they recalled. Those primed with credit card cues were likely to recall benefits, but forgot more of the cost data. Cash-primed subjects performed just the opposite.

Show Me The Money

The Neuromarketing takeaway is that if you are selling mainly to credit card customers, focus your advertising and sales efforts on benefits. These customers will be less sensitive to details about price, shipping fees, etc. But for your cash customers, you should work to demonstrate that your offer is cost-competitive and a bargain, e.g., lower price, lower installed cost, free shipping, etc.

This divide is far from absolute. Credit card customers still care about price. (Personally, I comparison shop even though most of my purchases are by credit card. I’m also a sucker for free shipping offers.) Cash customers obviously care about benefits, too – they wouldn’t buy the product otherwise.

Nevertheless, if you can tailor your pitch to one group or the other, be sure to play up either the product’s benefits or its competitive cost.

  1. Astro Gremlin says

    If I paid cash for half the stuff I bought on credit cards, I wouldn’t have! Interesting study and makes sense. Free shipping? Sucker here. Double the price and throw in free shipping — I’ll go for it.

    1. Roger Dooley says

      Credit cards are huge enablers, too, AG. Even if you don’t have $500, you can make a $500 purchase. This study is interesting because it separates the “product viewing” aspect from the practical money aspects of credit cards.


  2. ella says

    I’m a big sucker for free shipping as well, i think that there’s just something about that word, free, that’s so addictive lol

    1. Roger Dooley says

      Ella, there’s no doubt that “FREE!” is a huge attraction to our consumer brains. See The Power of FREE!.


  3. Nawaz says

    If you pay with a credit card, you are also likely to avoid the pain of losing money.

  4. David Moloney says

    Hi Roger, I’ve heard also that merely placing credit card provider logos around the shopping experience increases people’s appetite to spend. As indicated above, people who pay by credit card don’t seem to feel the money separation anxiety as much as those that pay by cash. This payment delay seems to numb the money loss senses and actually makes people happier to buy multiple items.

    …as long as they buy the expensive items first (but that’s another area altogether)

    1. Roger Dooley says

      David, your comment makes a lot of sense in relation to the research, which used a “priming” technique, i.e., exposing the subjects to credit card or cash imagery.


  5. Rusty says

    I definitely believe it. The ease of paying by credit card makes spending so much easier – if I open my wallet and have to use half of what’s in there I’m not as likely to make purchases I don’t actually need. Plus the allure of getting that little 1% cash back by using a credit card is a subtle incentive even if that 1% back is only a dollar – it is still “free” money. 🙂

  6. Saksham Talwar says

    I guess this is something I should start focusing on! I mostly focus on credit card customers being an online marketer, but for my offline products (which I plan to launch next year) I think the cash thing needs to be considered. ANother item in my to-do list!

    Thank You,

  7. Joe says

    I had friends who pay credit card with another credit card balance..” If you cant afford it, dot buy it” …

  8. Joy says

    I like the protection that buying by credit card gives. In theory!! And am also a sucker for free shipping. Note to self: include the words “free shipping”!

Leave A Reply

Your email address will not be published.