Using your phone to pay can mean you'll spend more | Hacker News Reader

Using your phone to pay can mean you'll spend more

npr.org

33 pointsredbell75 comments

It is interesting that the first thing society makes frictionless with technology is payments, easing consumerism. Perhaps we should have aimed to make other things frictionless, such as: seeking good medical and dental care, buying less disposable packaging, choosing products that are sustainable. Or what about spending time in nature? That should be easy for everyone with a safe and decent-sized park within walking distance of anyone's home.

Nope, it's consumerism that we are easing. It goes to show you the true priorities of the techno-industrial society!

This is an overly cynical view in my opinion. Firstly, payments is certainly not the first thing we made frictionless using technology. Reducing friction for things is not at all a new trend. Heck, just take a closer look at the device being used for Apple Pay: a Cell Phone! A technology that made it easier to talk to anybody, anywhere!

Secondly, automating payments is just an easier accomplishment than automating access to healthcare. With healthcare, you need to find the right provider, and do a bunch of other non-trivial things. Payments boils down to moving numbers from one ledger to another which is much easier. So of course society accomplished that before automating access to healthcare. It does not at all mean that society doesn't value healthcare

The first thing made frictionless by the Internet is probably communications. And yes payments is something that can be solved mostly inside of a computer so it's much simpler than healthcare.

> A technology that made it easier to talk to anybody, anywhere!

Seems like the phone made it easier to disconnect from the people around us by giving us too many options, IMO. It's more just to ease commercialism.

I am 37 years old and I have never ever found payments to have any friction, my 1950s/1960s parents feel the same with the credit card being the last significant technological advancement.

All the rest have been many but minor quality of life improvements here and there, but payments have been frictionless for as long as I remember.

Using my phone to pay is pretty low friction. There's literal friction to pulling anything out, but the phone comes out much more easily than the financial xenomorph of pulling my wallet out, then pulling a card out of the wallet. Then I have to stab the chip end in a reader since I have yet to find one that supports tap to pay.

> I have yet to find one that supports tap to pay

Interesting. I haven't seen one in years that doesn't support it in the US. Most of the time even when I hand my card to a cashier because the terminal is by them, they tend to tap it.

I was at a Walgreens once where they had it disabled and the cashier sighed and said the manager disabled it because tap incurred a slightly higher processing fee than inserting the card. This was a couple of years ago and not sure if it's true, but that's what the cashier said the manager said.

As somebody who has a broken wrist right now: yes, it’s A LOT easier and frictionless to use phone than having to pull out/put back in a card.

I dropped my phone a couple inches into a rug and now it’s covered in tiny glass shards so I’d have to disagree. Hope your wrist heals up soon.

Then don’t drop your phones

I changed my mind about your wrist.

It’s even easier to tap my smart watch! I love it and I feel more secure than getting my card out.

Keep the card in the pocket directly.

Taking your example of visiting a park: due to technology (having a device like a smartphone), I can arrive in a town and immediately see visually in which direction to walk so that I get to a park, having never set foot in the place before (I literally did this yesterday). Without that technology, this would only be possible after finding a shop which sells maps of the locality. Which is the more consumerist situation?

But phones aren't free, they have both significant up-front and recurring expenses. Trading "I need to buy a map" for "I need to buy a phone so I can look at a map" isn't a straight win.

And at the same time, before phones, every municipality had a place with free maps of major landmarks, precisely because they want to encourage tourism without forcing people to buy a local map.

The situation of needing to own a phone in order to participate in society is similar to how here in the US we require people to own cars to participate in society; it is a financial burden whose effects are felt disproportionately by those who are less wealthy.

Which resulted in a lot of paper maps being produced and thrown away, so not everything only has upsides. Just like camping ground guides that came out yearly, street maps that had to be re-bought every few years etc.

If we're going to continue the comparison, how many phones are produced and thrown away yearly?

I'm not trying to demonize phones, I'm trying to make us conscious of the phone-shaped blind spot in our collective consciousness. Phones aren't zero-impact.

Your examples don't make sense to me. Everything you list is either something which was made frictionless by the invention of the web (searching for doctors and dentists, choosing sustainable products) or something that cannot be made frictionless by technology, only by government (building more parks).

The article seems to define frictionless as "significantly improved", so maybe that's where the confusion lies. Their example of a frictionless technology is something that takes 30 seconds using a phone versus 40 seconds using a credit card. I'd take issue with whether that really means without friction, or even whether that's a significant improvement at all, but that is their definition, so I'm going with it.

All of these things (healthcare, buying products...) require money transfer. So by making payments frictionless, you're diminishing friction in these things too.

Healthcare does not require money transfer for the consumer. (Well in a non third world country).

> Healthcare does not require money transfer for the consumer. (Well in a non third world country).

I think the commenter was suggesting that by making health care frictionless people are more likely to use it.

There is ultimately money going from consumer to health care provider - whether that's later with an invoice or indirectly via payments to insurance company and from them to the health provider (or taxes for a government provided healthcare). But if you don't have to get out your credit card on each doctors visit, people will go more often.

Healthcare, and other issues you care about, are not immune to the laws of supply and demand just because you slapped your "this is important gang" sticker on it.

Healthcare will always require money transfer.

Money transfer is not required from the person who is ill. I am in the UK and if I am ill I don't pay anyone to go to hospital. I have already paid through taxes and national insurance and those get deducted from my pay packet by my employer so for me and many in the Western world phone payments are not relevant for healthcare.

There have been attempts at making it easier to seek medical care. There are services which give you online access to quick scheduling and even online prescriptions for common problems. I think the major barriers are due to regulations and inflexibility of existing structures.

I think that the increasing role of physician assistants could could make health care more affordable and thus reduce friction. There's a lot of common ailments that people seek treatment for that have a prescribed treatment protocol that doesn't require a specialist MD. In theory it should make healthcare more affordable to people since PA's don't make as much as doctors and don't require as much schooling. What I'm not sure about is whether the consumer is seeing any of the cost savings, or is it all getting captured by hospitals/intermediaries?

My primary care pretty much switched to supervising a few PAs in his practice and I've been pretty happy with the quality and price.

I didn't even know that PAs existed when I went to school because I think it would have been a decent career for myself. I think about it as an alternative plan after the next time I get laid off.

You're not going far enough. Canada allowed Pharmacists to do diagnosis + prescription for some common over the counter meds with minor side effects.

> It is interesting that the first thing society makes frictionless with technology is payments, easing consumerism. Perhaps we should have aimed to make other things frictionless

By "society" and "we" I assume you are talking about American society?

Because there are many societies that prioritize and in fact have already done these things.

One could argue that America lags far behind other much more modern societies in virtually every metric that isn't "number of billionaires"

Welcome to capitalism!

From TFA: "Technological advancements can offer us a lot of convenience and improve the security of financial transactions."

As someone who works in security and privacy, it always stands out to me when the "and privacy" part is left off.

It's not really clear from the article but I imagine that frictionless payments online contribute a lot more than physical ones. If you're making the decision between using a physical credit card and your phone then you've likely already committed to making the purchase. But it's a lot easier to back out when you're online. The option to use Apple or Google Pay on a website (even if you have your cards saved in the browser and it's just a few clicks to autofill) is so easy.

To add to that, installment plans that are offered on pretty much every purchase nowadays just compound the problem.

Per my anecdotal experience, this is same with credit cards versus cash and before that checks/cheques versus cash had the same effect. The joke "I still have cheques, that means I still have money" or some variant, refers to this frictionless behavior.

With lack of basic personal money management education, it is a permanent, lifelong indebtedness for a very large portion of the population.

The headline sounds like it means some places charge more to people paying with their phone. This is not what the article is about. The article is about how people are apparently buying more stuff because payment is easier.

I imagine not having to physically forking out the notes and coins from the one you have in your pocket/wallet, where you can literally see your money supply diminishing, also has something to do with that.

I do believe that some people account for money that way, but for me it's the opposite:

On my credit card statement or bank account, I can at the end of the month see in detail how much I've spent, broken down by category and merchant; with cash, it all just shows up as "ATM withdrawals" and I have no sense for where it all went.

I use a budget/ spending tracker and even my cash spending is logged, which is really tedious but has reigned in my overspends. There's always a rounding error with cash (lost a coin, left some in the car etc) but I really surprised myself with some actual savings made. Even 50 cents for a cup of coffee 4 times a day adds up. I completely gave up coffee.

That might be the case if we were comparing it to cash, but the article appears to be comparing it to card payment.

This has been my personal experience as well.

UPI payments in India have enabled seamless mobile payments through qr code scanning.

Since the bank account is debited directly, it is difficult to get an idea of monthly spending until we check the account statement and it is easy to overspend.

Ever since I've started using UPI lite which is a prepaid wallet that has limits on both max prepaid balance and max amount per transaction, I guess the extra friction and the very visible balance made me rethink some purchases.

Most banks I've used offer some sort of budgeting feature that lets you track where money is going in real time. Is that not common with Indian banks, or do the UPI bookings not happen in real time?

UPI is real time. Most banking applications do offer a feature to categorize card spends in a time period but not UPI as they are typically peer-to-peer transactions.

If you mean envelope budgeting type feature, I'm not aware of any.

> It takes about 40 seconds to buy something with a physical credit card, compared to just 30 seconds to buy it with a smartphone.

Looking at the linked paper, it suggests someone was able to make a cash payment in 5 seconds (see table 2). Where the closest of other methods would be a contactless card of about 21 seconds. Just have exact change in hand! Cash also has the highest time of 244 seconds.

> Just have exact change in hand!

Easy enough in places that incorporate tax into the list price, but this is next to impossible in the US. You'd have to know what the city, county, and state sales taxes add up to (accounting for any products that have a different sales tax than others!) and then do the math with the weirdly specific percentage(s) that results (again, taking into account that some items are taxed differently!) to come up with your exact change.

Try doing that with a week's worth of groceries.

I'm not really sure it matters when you spending a few minutes waiting in line anyways

You can prepare the exact amount in cash while you're in line. Then it's 0.

Not if you include the time for the cashier to verify the amount is correct and dismiss you.

You forget the network time for the transaction.

I didn't claim paying with credit was 0 time.

Make sure to bring vast amounts of coins in an organized way that lets you retrieve them in time!

This is quite tricky if you live somewhere that charges sales tax.

How so? All of Europe has sales tax, and it's not a problem. Don't the published prices include tax where you live?

The US doesn't do VAT, sales tax is applied at checkout, and isn't part of the sticker price. Part of the reason is that attempts to do VAT or some other system that would incorporate the tax into the sticker price are accused of trying to hide taxes and "trick" people into not being mad about having to pay taxes. And it probably works, too- every time you check out you get a little reminder about your state's sales tax rates.

(VAT is a bit different from the way the US-style sales tax for other reasons: https://en.m.wikipedia.org/wiki/Value-added_tax )

Thanks. American logic is weird in so many ways. Publishing a price without including tax to consumers is forbidden here since it's misleading.

It's because it varies so much from place to place. Sales tax (possibly on certain items only!) can vary hugely just from crossing a street, because you crossed a municipal, county, or even state boundary (there are numerous examples of this last one, such as Kansas City, Kansas vs Missouri, or Bristol, Tennessee vs Virginia, where the state line runs down the middle of the street).

If you can calculate it at the till, you can calculate it when putting a sticker on the shelf.

But you can't put out a flyer with advertised prices, unless you do a print run for every store.

It's difficult, but everyone in a local area knows already.

Here the prices on the shelves include the tax.

Is everything priced in round numbers after tax too?

Many (all?) European countries include VAT in the price, but prices of 9.99, 0.99 etc. are all too common.

Yes.

You are confusing "misleading stickers" and "sales tax" I think

These days it's more like five minutes while the kid calls the assistant manager over to teach them how to count money. Paying cash today is about as convenient as paying with giant stone coins.

I think it's because China is in deflation, so they simply want to spend more. Unlike the US and Europe with inflation and tipping culture, even though they pay with smartphones they still don't want to spend a lot of money.

Shouldn’t deflation cause people to want to spend less? Spending deflating money is throwing out an appreciating asset. Japan used to suffer from long-term deflation and I’ve heard people there were generally frugal in reaction to that. Vice versa, holding on to money during inflation makes you just lose money, since tomorrow you won't be able to afford the things you can afford today.

Yeah, this was a primary goal of at least 'Click to Pay'. Lots of people abandon carts once they hit the screen that requires payment details because the 'wallet is too far away.'. Or requires registration, payment info capture, etc. Mobile wallet apps address the same convenience factor (as the article mentions).

Another goal was to prevent merchants from getting and storing your payment information. So that's perhaps a plus.

I worked on SRC (the EMV spec Click to Pay implements) at Amex.

> Lots of people abandon carts once they hit the screen that requires payment details because the 'wallet is too far away.'.

I don't know if it's just me, but I often "abandon" my cart once I hit the screen that requires payment details because I had to get there in order to see how much shipping I'm going to have to pay.

Then I can do the whole process again with a few other stores until I can compare which of them gives me the best price.

It's also often only on the payment screen that you can discover whether or not they even ship to your place.

Likewise with 'coupon codes' - they are usually supposed to be entered at the final stage before paying. You don't know if the coupon code has expired or whether it is valid for that shop until the last moment.

I "abandon" carts because I was just dicking around and building a wishlist really.

According to some market papers, this is stealing from the retailer or something. Lol

> A secondary goal was to prevent merchants from getting and storing your payment information. So that's perhaps a plus.

Can Google or Apple see what is being purchased through those apps? I'm assuming not, but not knowing the answer to this has kept me using my credit card to tap with since that method doesn't add yet another company into the mix (at least as far as I know). Especially one, in the case of Google, whose main business model is selling my information to others or using it to target me for ads.

It is not obvious to me why people are downvoting you for sharing your professional experience. Can somebody explain?

People downvote personal experience, factually correct statements etc. all the time here. I also find it confusing.

Best I can think of is that it somehow indicates disagreement with the state of the world that has brought about the experience or facts relayed...?

This is such a weird article.

At the shop: paying with a contactless card < 50 EUR takes 3s. Paying with maestro and slotting it and/or having to input a pin: maybe 10s.

Fumbling with your phone if you don't use biometric unlocking: 15s if I am quick, probably more like 20.

The only part I agree with is grabbing the physical card at my desk and inputting the numbers. Oh wait, I might have saved those numbers in my password manager, not even autocomplete in the browser.

I dunno, maybe I'm just not the stereotypical consumer but I am only annoyed if it's not frictionless to pay. But it just makes me angry, not more frugal. And typing out all my details takes just as long as the payment method. But then I've never used OneClick-Pay on Amazon, so maybe I'm taking those 30s to think about impulse purchases anyway?

Are there any downsides to citizens to enact legislation requiring something like 1 price no matter the payment source? I.e. the same price whether you pay online, in-person, or whether you pay with a phone or through the web? I could see some differences with in-person versus online, or with difference prices for various locations, but why not charge the same whether you're using a phone or website?

Maybe someone should create an app or some other technology that identifies the lowest cost payment method (web or mobile) and then sends that data as your user agent so you can get the lowest price.

Increased cost to consumer, less margin for sellers, and perverse incentives.

Amazon already does this with anything covered by Amazon fulfillment (you’re not allowed to have a lower advertised price anywhere else). This just means that more people are funneled to the easier method, because if it all costs the same why would they care? So Amazon gets more money, the seller gets less overall (worse margins on fulfillment orders), and Amazon’s monopoly is entrenched further.

How would this increase costs?

If I go to your website and a shoe costs X, and you see that I'm on a mobile phone so you raise prices X+y, and legislation dictates that you can't raise the price due to my browser profile, costs would go back to X.

Maybe you could argue that costs rise for everyone because pricing is equal, but I don't see a problem with that, and there's a limit due to elasticity.

I'm not talking about one guaranteed price, just that on a given website you can't charge more if I use Firefox, or if I'm browsing your site from an iPad.

Thats not an equivalent comparison though. Has nothing to do with browser profile, it has to do with using the services associated with the App Store.

They’re more than just a payment processor, much like Amazon is more than just a payment processor.

Right now you’re free to offer a discounted rate off the App Store, but you just can’t advertise it on the App Store app. In comparison, Amazon won’t even let you offer a lower price, which is worse for consumers. Likewise, forcing all prices to be the same raises prices uniformly since other vendors can’t offer a worse service (Eg slower shipping, in the case of Amazon) at a discounted price.

Well, on the App Store side some companies do generally charge more if you are using something like an iPhone without including the payment processing fees as an extra factor.

On the web some companies will alter their pricing if your browser profile is Safari for example. I think there is a clearer case here for not allowing discrimination based on web browser in pricing online.

I don't on the face disagree with your assessment on Amazon pricing, though the App Store is a little bit different and we should clearly separate it out here.

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