Cashless Effect
Why paying with cards or digital methods feels less painful than cash and how to use this spending psychology in marketing.
In this issue
Hey 👋🏻 The Crew here.
Don’t you think Santa Claus has the most effective PR and personal branding in the world?
Like, it’s just enough to imagine Santa’s face and you already know what’s coming. And it’s exciting. And you’re ready to buy some presents and call your loved ones.
Tip for LinkedIn influencers: Try to replicate Santa’s content. It works.
Let’s move on to psychology.
Reading time: 4 minutes, 44 seconds
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Did you know the pain of spending money is real? It is even backed by science.
This dreadful feeling of parting ways with your hard-earned money is especially intense when you’re dealing with cash.
Because it’s more tangible, and therefore, feels more “real.”
In fact, many theorists that argue casinos don’t use chips for the convenience or security measures, but for something more sinister…
You don’t associate chips with cash. Though they represent money, they make you feel like it’s “just a game.”
… And you tend to spend a bit more than you would if you paid with cash.
Like we said, this “cashless effect” has been proven by hundreds of studies—including this one, which just came out this year.
And the research all points to one thing—we’re more likely to pay when there’s no physical money involved.
It’s not only casinos that leverage this effect. You can do it too… ethically. Let’s see how.
Three ways to leverage the Cashless Effect
Gamify money
In online games—especially the ones that monetize through microtransactions—you’ll often find you can’t buy items with “real” money. And we don’t mean cash—we mean any existing currency.
In Fortnite, for instance, you buy or earn “V-bucks,” which are pretty much real dollars converted to virtual currency that help you buy in-game stuff.
Why are we telling you this: Because brands do this, too.
Starbucks incentivizes you to preload cash into its loyalty Starbucks card so you can spend that “cashless money” to earn stars for additional perks and rewards.
By doing this, you’re disconnecting from the “real world currency” in a sense.
Fun fact: There’s apparently $1.77B in unredeemed Starbucks cards—solidifying the notion that going cashless just doesn’t hold the same weight. Pun intended.
Implement a Buy now, pay later (BNPL) system
BNPL is effective for two reasons.
First, it encourages instant shopping, especially when a purchase is more expensive, because it breaks it down into smaller, interest–free installments.
Second, the delayed financial impact reduces the psychological friction of spending.
BNPL is a good way to boost conversion rates for high-ticket products or services, and even your average order value—like when you bundle multiple products, for example.
Leverage subscription services
One of the best indicators of how the cashless effect works are subscription services.
Ever realize you’re subscribed to four tools you don’t use, two streaming services, and a game you no longer play?
Yeah…
Subscriptions work because the first payment is cashless, and every payment following is automatic, reducing the pain of paying individual invoices each time.
Not only does this reduce friction—it removes any tangibility.
Brands like Barkbox and HelloFresh are all subscription-based and boast record growth and revenue every year—with high retention rates, too.
Despite the subscription market being a bit tougher now than it was in 2021 and 2022, a well-run model can provide a nice recurring revenue stream.
EMAIL MARKETING: Black Friday alert! You can save up to 40% on Moosend, the email platform that Domino’s and CareerBuilder love for its intuitive design and top-notch support. Hurry though—this discount ends in 3 days. Grab your code now.*
INFLUENCER MARKETING: Keep your Black Friday and Cyber Monday ads fresh with a steady supply of licensed UGC, while getting extra organic reach from micro-influencers whose followers vibe with your brand. It’s super easy, too, because minisocial does the matching. Start your first campaign here.*
CONVERSION RATE OPTIMIZATION:SaaS and e-commerce landing pages struggle with conversions more than other industries, according to reports. But that’s not all—and this article unpacks a few more conversion rate stats from this year, so check it out.
E-COMMERCE:If you want to sell more—and who doesn’t—you may benefit from adding a Buy now, pay later (BNPL) option to your store. Apparently, “more shoppers than ever” are looking for the option. They’ll probably look for it this weekend as well… wink, wink.
LINKEDIN:We don’t often get LinkedIn algorithm insights. Especially not from the platform itself. And according to its insights, posts with supportive intent like industry tips or business advice do well. Nothing revolutionary, but good to know.
ICYMI, last time we looked at the Cognitive Load.
The “Cash or card?” Crew
*This is a sponsored post.
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