The dangers of mobile payments

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It has been difficult to miss the constant flow of news suggesting that some time will soon United States reach with the rest of the world when it comes to using mobile phones and other devices such as digital portfolios. If you do not know what we are talking about, the idea of mobile payments is quite simple: you go to a store, and effective instead of flogging or plastic, offers up his cell phone, which pays for their purchase and charge a credit card you used to open its mobile Bank (se). As mentioned, this is already common practice in large swaths of Africa, Asia and Europe and for the obvious reason. What some call makes it surprisingly easy spending, reason by which we, the lovers progress both "contactless payment", two are at least a little nervous about the implications of this technology. Our concern is based on a principle of ur from behavioral economics: mental accounting.

In general terms, this is the idea that we are trying different money depending on where we are doing (i.e. salary vs. bond vs gift), where we maintain (University Fund vs has checks and retirement savings) or how we use (purchases large and small purchases) or amounts to both risen up against delivery. Mental accounting can be useful if it prevents touching account of College for their son, less useful if cause that make an optional ceiling Sun simply because it is spending much pasta to buy the car will make much more cold.
(Read more about the new Google Wallet payment system)

The relevance to mobile payment systems is considerable evidence that suggests that the zoom get spending money which is real money, the more likely to spend it more easily. The classic research in this area came from professors of MIT Drazen Prelec and Duncan Simester, who organized an auction of sealed bid for tickets to a game of basketball. Half of the auction participants were told that whoever won the tender would have to pay the tickets in cash (with a day to reach the money), while the other half understood that the winner would have to pay by credit card. And he doesn't know, the average credit card offer was about twice as large as the average cash offer.

This makes little sense. The human brain is always looking for shortcuts, for reasons of simplicity. And a useful rule is that an original element or true (in this case, cash) is usually more valuable than a copy or proxy (plastic). What we worry about expensive contactless payments is that the possibility of spending money with a simple wave of your cell phone will do that people, first of all, more likely to pass; and, second, weaker more when they do. Anyone with an account of "1-click" Amazon knows exactly what we are talking about.

There is no easy solution to this? Not really, although the posts later take a look to some smart strategies for fiscal restraint (see also our previous post). But it also feels like the right time to ask a question that we have been pondering for a while: what no U.S. more financial firms of kitchen more technologies to make socking money as easy as spending it? Putnam Investments has just come out with a saving which is quite ingenious, iPhone application but we are looking for something even friendly más-hucha, a feature of 1 and click on the digital devices that allow direct money on a whim in a savings account that gives you, like, three clicks to get his money back. Something like the momentum saver application developed by Westpac New Zealand. Consider the possibilities: you are walking down the street, you will see an impressive pair of shoes in a shop window, and as you're walking and establish your debit card, a thought more washes like a virtuous wave: No, I'm already using shoes. I do not need new. I'll send that money in my retirement account.
(Read about T-Mobile unofficially reintroduce calls unlimited wi-fi)

What do not like, right? In fact, some people lament that have been saved, but "boost savings" has much to recommend, and if someone wants to check, we have theories. We always have theories.

Follow @ TIMEMoneyland TwitterRead other related stories about this: Mobile payments in AmericaThe EconomistMental AccountingA Neat take on economy behavioral and momentum-saving

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