The Cashless Effect

Casinos use chips.

Arcades use digital credit.

And Apple (at least in some stores) no longer has a payment counter.

Ever wondered why? It probably starts with convenience. But ends in psychology.

Definition:?The cashless effect describes our willingness to pay more when we can't actually see the money.?

I learned about this a couple of weeks ago, and now I see examples everywhere.

The Apple Observation

Last Friday, I finally gave in. Gave up on my Apple Airpod Maxes. Too bulky for me. Couldn't work out in them. And, most importantly, it messed up my hair.

But I'm still an Apple guy. So I put my old Airpods for sale and headed straight to the Apple store (once again) to buy another pair. Smaller ones this time.

Stood at one of those desks. Spoke to an Apple genius. Decided on the Airpod Pros.

And paid. Right there. At the desk. Within seconds.

I had gone from being convinced to purchasing in less than 1 minute.

No chance to second guess as I move over to the billing counter.

No chance to second guess as I pay with just 2 clicks on my phone.

Maybe I didn't recognize this before. But Apple, at least in this store, had no billing counter. They have portable credit card machines. And you, obviously, have Apple Pay.

This was the cashless effect in action, and I stood there stunned.?

In the middle of a store that looked a lot like this.

But why exactly did this work for Apple??

Why was this money so easy to part with?

1. The lack of friction:?No billing counter, no steps, no time.
2. No real cash:?Studies have found that people feel more pain when they part with real cash. For instance,?a study from 2003?found that people are less willing to pay, even for smaller payments like laundry, when they have to pay with cash. Digital payments are just harder to quantify. But with cash, you know exactly what you're losing.
3. Our inaccurate projections:?Cash forces us to think in the short term because we got to pay immediately. With credit cards, for instance, we feel like we have the time to make back that $$$

TL;DR

I'm so proud of that meme :)

But anyways, that's enough about Apple (and my amazing sense of humor).

Let's chat about how we will use this insight to help your business.

3 Tips For Your Business

1. Portable Payment Stations

Don't make your customers walk over to the billing counter. Meet them where they are. And meet them as soon as they make a decision.

That being said, if you run a low-ticket shop, you might want to keep that billing counter planted in the corner of the shop. Make sure your customers walk through it all, see every single option out there - before they come and pay. That's probably better for you.

2. The Gamification Of Money

There's a very good reason that casinos use chips. And it ain't just convenience.

Think of ways you can gamify the spending process. Decrease the pain of paying.

The best example of this:?Robinhood. Study its app. Apply it to your business.

In fact, I'll be covering "The Robinhood Effect" in my newsletter this Thursday. Learn how they turned spending money into the easiest game you've ever played right here for free!

3. Go Credit Cards Only

If your business (or employees) would benefit from tips, use credit cards only.

Or, at the least, include a credit card logo in the tray that holds your bills.

A study in the Journal of Applied Psychology found that people tip an average of?4.29% more?in the presence of credit cues.??

?That's all for this Thursday. 1 marketing breakdown & 3 tactics to get you started.

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See you soon,

Abhishek "I'm Running To The ATM" Shah