Payment methods that make cost salient reduce spending, so friction in payment is a behavioural lever.
Prelec and Loewenstein's 1998 work. Cash is felt, cards less, one-click purchase least — which is why the same person spends differently by payment method without noticing any change in preference.
In practice
- A team that switches from an invoice to a corporate card increases spend without any policy change.
- A subscription paid by direct debit is cancelled less often than an identical one requiring a monthly click.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys