NEW YORK—When consumers pay without pulling their credit card out of their wallets—using digital wallets or e-commerce—they tend to spend more, a new study reveals.
In a recent paper based on data from a Chinese bank, researchers found that customers charged 9.4% more on average to their credit cards through both online and in-person transactions after they adopted a new mobile payment method, NPR reported.
“The research paper does not explore the effects frictionless payments are having on credit card debt. But the paper's lead author, Yuqian Xu, an assistant professor at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill, told NPR she believes they probably play a significant role,” NPR said.
Influence of Frictionless Payments
Given the paper's findings, and surveys showing that about half of the U.S. population uses mobile payments, Xu estimates that approximately 4.5% of total credit card usage in the country is due to the influence of frictionless payments, NPR said.
That means, Xu calculated, that about $50 billion of the $1.13 trillion in current consumer credit card debt can be attributed to the ease mobile payment apps present.
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