Is the U.S. on Its Way to Becoming a Cashless Society?

Shelle  Santana

Article | Harvard Business Review (website) | July 23, 2019

Is the U.S. on Its Way to Becoming a Cashless Society?

Abstract

The rise of digital payments, including credit cards, debit cards, and mobile payments systems, have contributed to the steady shift in payment practices among consumers. According to the FDIC, cash represented just 30% of all payments in 2017, and the percentage of U.S. households with a credit card jumped by more than 5 points between 2015 and 2017. Business owners who recognize this trend are responding accordingly, with some opting to go entirely cashless in an effort to increase operating efficiency, reduce wait times for customers, and create a safer work environment by mitigating the risk of theft. However, driven by concern for those without access to banks and cards, legislation in some cities is limiting the move to go cashless. This article cites several factors managers should consider as they mull whether to continue taking cash and predicts that the full move toward a cashless society is unlikely anytime soon.

Keywords: payment methods; Cash; Credit Cards; Consumer Behavior; Change; United States;

Format: Electronic

Citation:

Santana, Shelle. "Is the U.S. on Its Way to Becoming a Cashless Society?" Harvard Business Review (website) (July 23, 2019).

At each stage in customers’ journeys, they encounter different types of numeric information that they process using different judgment strategies. Relevant numbers might include budgets, price, product attributes, product counts, product ratings, numbers in brand names, health and nutrition information, financial information, time-related information, and others. This manuscript provides a review of the vast array of numerical information presented to consumers at different stages of the customer journey. It also identifies several different types of judgment strategies that consumers use to evaluate numeric information. It includes a discussion of how consumers use these judgment strategies during the pre-purchase, purchase, and post-purchase stages of the customer journey, highlighting unanswered questions that identify new research opportunities. Implications for practice and research are identified.

Article | Marketing Science | January–February 2020

Consumer Reactions to Drip Pricing

Shelle Santana, Steven Dallas and Vicki Morwitz

This research examines how drip pricing—a strategy whereby a firm advertises only part of a product’s price upfront and then reveals additional mandatory or optional fees/surcharges as the consumer proceeds through the buying process—affects consumer choice and satisfaction. Across six studies, we find that when optional surcharges are dripped (vs. revealed upfront) consumers are more likely to initially select a lower base priced option that, after surcharges are included, is often more expensive than the alternative. Moreover, consumers exposed to drip pricing tend to ultimately select this lower base price but higher total price option, even after being exposed to the total price and given the opportunity to change their selection, and even though they are relatively dissatisfied with it. We explore why drip pricing has these effects and find that they are driven by consumers’ perceptions regarding the costs and benefits of starting over and switching. Specifically, we find that high perceived search costs (study 2), self-justification (study 3), and mistaken perceptions regarding the potential gains of switching because of inaccurate beliefs that all firms charge similar additional fees/surcharges (study 4) all play roles. We discuss the implications of these findings for marketers, consumers, and policy makers.

Keywords: drip pricing; pricing; consumer protection; hidden fees; Price; Consumer Behavior; Perception;

Citation:

Santana, Shelle, Steven Dallas, and Vicki Morwitz. "Consumer Reactions to Drip Pricing." Marketing Science 39, no. 1 (January–February 2020): 188–210. View Details

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Is the U.S. on Its Way to Becoming a Cashless Society?

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