Payment options influence customer perceptions

My local coffee shop has this notification, on the door:


When I spotted this notice, I thought “That’s annoying. Why can’t I pay for my coffee with cash?”, which is bizarre because I rarely use cash these days. I usually pay for my coffee with card or app. Actually, I can’t remember the last time I paid for coffee with cash.

While my reaction was not rational at all, it was actually quite common. It’s normal. It even has a name. It’s called “psychological reactance“.

Psychological reactance is what we experience when we are unable to control a behaviour that we feel that we should have control over. We react by developing a positive attitude towards the behaviour that is threatened, even if we didn’t particularly favour that option, previously. We may also develop resentment towards the behaviour that is being imposed, even if we favoured that option, beforehand.


Why does this matter?

Psychological reactance matters for marketers because research has shown that it actually impacts on the evaluation of interactions with the firm. Specifically regarding the restriction of payment options, this study found that consumers gave lower evaluations to cameras and iPods when they were offered reduced payment options.

Researchers Kevin J ShanahanBarbara Ross-Wooldridge and Charles M Hermans conducted a study whereby they exposed participants to three types of adverts: one showing the product, but no information about payment options; another showing the product, as well as various payment options; and another one showing the product, as well as the Visa (credit card) logo. Participants rated the products more or less equally in the first two options, but less favourably in the third option, where they were explicitly offered restricted payment options.


What should a firm do, if they want to limit the payment options?

As more and more companies, in more and more sectors, adopt the same practice, we will soon be so accustomed to being unable to pay with cash that we will stop noticing, or caring. We also got used to not being given plastic bags by default, when we go to the shop.

In the meantime, firms would be better off offering multiple payment options, but directing customers to the desired one – just like with plastic bags, which are still available, but a) you need to ask; b) there’s a financial cost to using one; and c) the communications’ campaign around the use of plastic bags has led many shoppers to opt-out of using them.

Rathe than simply saying that cash is not accepted (which frames the decision as a loss for the customer), the coffee shop should try to position payment by cash as undesirable for the customer, and payment by card as the desirable option. Some time ago, I wrote about that a nightclub in a busy Spanish beach resort, which had offered its customers the option of having a chip inserted in their arm, with identity and banking information, so that customers could pay for their drinks by simply having their arm scanned by a chip reader. You and I may think that this is a bizarre proposition, but it was quite successful. Why? Because it was positioned as a VIP offering. The scarcity of the offer, associated with the perceived high status of those customers, turned this into a very desirable proposition. For some, anyway.



Would seeing that sign at the door have grated on you?

2 thoughts on “Payment options influence customer perceptions

  1. Hi Ana. As we use the same coffee shop, I can assure you that quite a few people do not see the sign and offer cash at the till only to be told that the shop only accepts payments by card. In these instances, the ones I have witnessed to date, the customers do not comment. Maybe because they are paying with a note so it is easy for them to slip the note back into their wallet and take out a card.

    I believe that the owners did not intend to ‘impose’ a form of behaviour on their customers by placing the sign in the window. When the shop opened, it did take cash. Then recently, the hair dresser shop two doors down from them had their front door smashed and the till robbed. This event was the ‘straw the broke the camel’s back’ and they took the decision not to have cash on the premises. They then put the sign up so that not only customers knew they had to pay be card, but any potential theifs would realise that there is no cash on the premises. Hence the the first two words being ‘No Cash’. It mitigates their risk and may even reduce their insurance costs.

    This means that the action by the owner was to protect their income and any adverse marketing effects are a consequence rather than it being a marketing decision and the protection of income a benefit. Therefore, any disgruntled or annoyed customers who dislike the policy is a price worth paying, in the owner’s opinion, because their value is small compared to value of the protection the business gains through adopting this policy.

    These are my thoughts.


    1. That makes sense. Maybe they could have added “for safety reasons”?! Someone tweeted a similar sign at an hairdresser’s, and it invoke speed and hygiene reasons.

      Alas, as we move closer and closer to a cashless society, soon this will be the default option, everywhere. And safer for retailers, too.


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