Accurately remembering how much money you spend depends on whether you pay by card or cash. Research by the University of Cologne and the Alpen-Adria-Universität Klagenfurt has shown that the recall accuracy regarding the amount spent is lower for payments by card than it is for payments by cash.

Researchers Dr. Rufina Gafeeva, Prof. Dr. Erik Hoelzl and Prof. Dr. Holger Roschk carried out a field study to determine recall accuracy in relation to recently made payments.

By gathering data in cafeterias at a German university during the summers of 2015 and 2016, they analyzed interviews with 496 students that were conducted immediately after the act of paying.

“We were able to show that individuals who pay by card have a less accurate recall of the amount paid than individuals who settle their bill with cash”, the authors summarize, who say that the results are relevant for the financial wellbeing of everyone. “A precise recollection of past spending has an effect on the willingness to spend money in the future.”

Smart cards are multifunctional and may also include further non-payment functions such as bonus programs or user identification. These functions play a critical role: “Individuals who use the non-payment functions of the multifunctional card are less likely to remember the transaction details accurately.” Moreover, this multifunctionality also applies to other digital devices such as smartphones or smart watches which can integrate the payment function with other non-payment functions.

“To heighten our awareness, we need designs that separate the payment function from other functions, or that visualise the act of spending money, such as immediate payment information or transaction summaries.”

These findings were published in the Journal Marketing Letters.