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Physical cash not only influences how much we spend but also fosters a profound sense of psychological ownership that digital payments cannot replicate, according to research from the University of Surrey.
In a paper published in Qualitative Market Research, researchers detail as cash fades from our wallets, so too does our awareness of spending, leading to impulsive and unnecessary purchases. The study suggests that maintaining a physical element in our payment systems may be vital for promoting responsible spending behaviours.
Dr Jashim Khan, Associate Professor of Marketing and Director of International Business Management and lead-author of the study at the University of Surrey said:
“The visceral nature of cash — its smell, feel, and the act of counting it — creates an emotional connection that digital payments lack.
“When we handle cash, we are not just spending money; we are parting with a piece of ourselves.”
The research team conducted their study in two different cultures, and at very different times — New Zealand in 2013 and China in 2023. They used focus groups and open-ended questionnaires to gather rich, detailed data about consumer experiences with cash and cashless payment methods. Participants were asked to describe their feelings and behaviours surrounding the use of different payment modes. They found that cash promotes heightened awareness of spending, while cards and apps often lead to a disconnection from the money being spent.
While 50% of transactions in China are made through app-based payments, participants expressed a diminished sense of ownership over their finances. One participant noted, “Digital money doesn’t feel like spending your own money; there is no concept of money, but cash is different; it always feels like your money is decreasing when you use it.” This sentiment echoes across both studies, underscoring the emotional weight that cash carries compared to its digital counterparts.
The research also found that while people feel happy and secure using third-party payment apps, they sometimes struggle with a sense of loss when parting with cash. Emotional responses to cash transactions include sadness and guilt, reflecting a deeper psychological connection to physical money. In contrast, the ease of digital payments often results in mindless spending, as the tangibility of cash is replaced by abstract numbers on a screen.
Dr Khan continues:
“Our research shows that cash isn’t just money — it’s a way to stay connected to what we spend. Holding cash in our hands reminds us of its value, something that digital payments can make easy to forget. As we use more cashless options, it’s worth remembering the lessons cash teaches about spending wisely. We’re not saying cash is outdated. In fact, we’re rethinking how we view and manage money as things change. Moving to a cashless society means we need to understand how different payment choices affect us, not just financially but emotionally. Knowing this can help us make better financial decisions in a world where money often feels invisible.”