How Mobile Apps May Be Negatively Impacting Your Spending

Millions of us use mobile payment apps on a daily basis, and increasingly they’re being built into society — on subway turnstiles or at your favorite lunch spot. Thanks to apps like Venmo, the task of splitting the bill a billion ways at dinner has never been so uncomplicated and clean. And using the Starbucks app, you can bypass that lousy line, promptly and triumphantly swooping out with (pre-ordered) coffee in hand.

There’s just one problem — mobile payment apps probably aren’t doing your wallet any favors. “Our society is very much attached to things being fast and easy. More and more we want fast and easy everything… but fast and easy payment diminishes some thought about what we’re buying,” says Kit Yarrow, consumer psychologist and author of Decoding the New Consumer Mind. With mobile payments, spending is made somehow less painful. But a little “pain” — aka increased awareness around cost — is helpful when we want to reign in our purchasing. Think about it this way: There’s little time to undergo the thought process of “Do I really need this?” when two taps on your iPhone screen is all it takes to make that expensive kombucha yours.

The longer it takes to pay for something, the more likely we are to be more conscious of the cost, says Yarrow. For this reason, “slow payment usually results in better spending decisions.”

Why Mobile Payments Are Taking Over

It makes sense that businesses worldwide are on a quest to diminish transaction time — the quicker you can pay and get out of there, the fewer shopping carts will be abandoned, explains Bob Sullivan, consumer advocate and author of Gotcha Capitalism. “Every time you click on something or have to scroll, that’s a chance you might click away or get distracted,” Sullivan says. The fewer steps involved — the less time there is between laying your eyes upon the shiny product and throwing your money in — the more consumers spend.

But a reduced transaction time isn’t the only way mobile payment apps might compel you to spend more. Because mobile payment apps are hooked up to your credit cards, they are far removed from real cash. “Studies show there’s a chemical, emotional reaction in your body when you feel dollar bills leaving your hand,” Sullivan says. ‘Your body reacts physically to money leaving you in a way that it just doesn’t when you use your phone or a piece of plastic.”

The Socialization of Spending

In addition, many shopping apps feature social media-like prompts that may inspire us to spend more. For example, on Venmo, the default setting for your activity is public, which means that anyone can see what you’re buying and who you’re out with. In this way, a financial transaction between two people can become a source of social currency. “If you see people frittering money away easily, it makes it seem okay for you to do it, too. It’s a social standard that gives you psychological permission to spend,” Sullivan says.

Some apps — like Starbucks — take things a step further and utilize gamification, or incentivizing you to spend by offering prizes. “Winning” things by spending can give you small surges of dopamine, inspiring you to spend more than you might normally, says Yarrow. “It’s kind of ironic that we spend money to get things for free.”

Reigning It In

So, if you’re going to use the apps — which, face it, you probably are given their convenience — what can you do to reign in your spending? How can you remind yourself you’re spending real (hard-earned) money when you’re caught up in the satisfaction of digital ease?

Sullivan suggests re-introducing some of the pain around spending that mobile payment apps strip away. For example, you can remove your stored credit cards from apps, so that you’re forced to re-enter your number manually anytime you want to make a purchase. You can also activate text alerts that will inform you of your credit card balance and spending, so that you’re healthily forced to stare the reality of your spending in the face.

Simple awareness can go a long way. “First and foremost, be aware that you’re more vulnerable when you’re using apps of overspending. Most people, if they just remind themselves that this is a dangerous way to spend money, will be better at it,” says Yarrow.

With Molly Povich

Jean Chatzky

Jean Chatzky