In a world where cash is becoming increasingly irrelevant, the forgettability of hard currency is often overlooked. A new paper by Stanford Graduate School of Business investigates whether consumers use cash for guilty pleasures and hard-to-justify purchases to avoid confronting a record of their spending. The study builds on the concept of “motivated memory” and explores how bringing a record into a transaction can impact our perception of the purchase and ourselves. The research suggests that people who see their transactions as a reflection of who they are may choose cash to avoid self-recrimination. The findings also imply that new forms of money like cryptocurrencies, which are less trackable, may replace cash in terms of forgettability. Additionally, budget-tracking apps and mobile payment services may actually incentivize cash usage by reminding consumers of their hard-to-justify purchases. The study suggests that financial institutions may want to consider designing payment methods that give users fewer reminders and notifications. Furthermore, merchants may improve consumer satisfaction by matching their accepted payment methods to their specific offerings.
https://www.gsb.stanford.edu/insights/indulging-guilty-pleasure-dont-put-it-card