This is my iPark e-parking meter device (see picture). I normally pull into a parking spot near the office, press a couple buttons, and hang it from my rear view mirror. It tracks the time I’m in the spot and deducts payment from a pre-paid account automatically. This morning it died on me. Since I won’t be able to get the device replaced for several weeks (an issue with the manufacturer), I needed to run to the bank to pick up change – which happened to be rolls of gold dollar coins and quarters.
When I pulled back into the spot, I gathered up several gold dollar coins in my hand and walked to the meter. It might sound silly, but all those shiny shimmering gold dollar coins dropping into the meter… There was something about physically parting with them that made me uneasy. It wasn’t like pushing the button on the iPark and paying with my magical digital money.
This episode brought to mind a recent study that found people think differently about their purchases when they are using physical cash versus credit cards (and probably the same for other forms of digital currency like gift cards, mobile money, etc). People have a harder time parting with cash because they focus more on how much they are spending rather than what they are getting for it.
I think this is an important reason retailers should and will adopt m-commerce platforms. They want consumers to focus on the product/service and the benefits they’ll provide, not just how much it is. Its easier to get consumers to spend a little more on premium offerings when they are focused on benefits. With m-commerce, the consumer doesn’t even have to take out a credit card to pay. Just tap your phone and go. Or allow consumers to purchase through apps on their phones – Starbucks has already collected 42M payments through its coffee app. And of course vending machines will be able to accept m-payments and could increase impulse buying among consumers.
This isn’t a cure-all for what’s ailing businesses by any means. Consumers aren’t lining to up to give away their money for nothing. Businesses will still need to focus on value and benefits. But when you look at the psychology, if you get consumers to use digital payments, they will focus more on what they are getting than how much they are spending. And that presents great opportunities for sellers.
Now if only I could only get a new iPark so I can go back to ignoring how much parking really costs.