This is the conclusion of the DNB Working Paper “Payment behaviour: the role of socio-psychological factors”.
Socio-psychological factors determine payment behaviour
A better understanding of consumers' payment behaviour is important for the development and improvement of payment means, and can help retailers and bankers to further promote electronic payments. The working paper shows that the choice between cash and electronic payments is mainly driven by socio-psychological factors such as emotions and habits. This study into consumers' payment behaviour is the first to specifically focus on these factors. Two surveys were held to examine how people intend to pay and how they actually pay at points of sale (POS), and the factors influencing their decisions.
Perceptions of payment means determine consumers' attitude
Consumers' attitudes towards means of payment are determined by their perceptions of these means. The majority of consumers associate electronic payments with ease of use, quickness and security, but they think privacy is more closely associated with cash payments. Consumers believe the main thing is that all means of payment must be secure and widely accepted.
Emotions, attitude and appropriate behaviour determine consumers' intentions
The intention to pay in a specific way is mainly determined by consumers' attitudes, but also by their emotions and perceptions of appropriate behaviour. The emotions mostly influencing payment intentions are pleasant, reliable and easy. The intention to pay by electronic means is relatively strong in consumers who believe that electronic payments are pleasant, reliable and easy compared with cash payments. It is also relatively strong in consumers who think it is appropriate for individuals with the same life context to pay by electronic means.
Consumers' social environment and the perceived opportunity to pay in line with their intentions also play a role. Consumers who believe others in their environment (e.g. friends or other customers) usually make electronic payments are more inclined to pay electronically than people who believe others usually pay in cash. Consumers who believe it is in all cases possible to pay electronically are more inclined to pay by electronic means than respondents who believe this is not always possible.
Influence of habits
The choice between paying in cash or electronically not only depends on intentions, but also on habits. A strong habit to pay in cash increases the likelihood that a person actually pays in cash, even if they initially intended to pay electronically. Conversely, a strong habit to pay by electronic means decreases this likelihood. During the two weeks of the study, only a small proportion of respondents actually experienced they could not pay in the manner they intended. The role of this factor in explaining consumers' behaviour is therefore limited.
Effective payment behaviour
Retailers and banks strive to promote effective payment behaviour, and wish to achieve a ratio of 40/60 for cash/electronic payments by the end of 2018. This ratio is currently 50/50. Banknotes and coins will continue to play an essential role in the payment system, however. The study shows that payment behaviour can be influenced in various ways. One option is by changing payment intentions, for example, creating a more positive attitude towards electronic payments by influencing perceptions of security through campaigns, or creating the perception that paying electronically is appropriate for people of the same age and lifestyle.