As if the payments industry has not faced enough difficulty with new regulations and the fallout from a poor economy, a new study now links card use to obesity.
Consumers buy healthier food with cash than they do with credit and debit cards, as impulsive spending made easier when using credit and debit cards instinctively influences consumers to buy unhealthy food, the new research suggests.
In the study, marketing researchers from Cornell University and the State University of New York analyzed the shopping behaviors of 1,000 households over a six-month period. The researchers published their findings in the October issue of the Journal of Consumer Research.
Two factors are contributing to the difference in the types of food consumers buy when using cash and cards, according to the report's authors: Manoj Thomas, Cornell assistant professor of marketing; Kalpesh Kaushik Desai, SUNY-Binghamton associate professor of marketing; and Satheeshkumar Seenisvasan, a doctoral candidate at SUNY-Buffalo.
"First, there is a correlation between unhealthiness and impulsiveness of food items. Unhealthy food items also tend to elicit impulsive responses," they wrote. "Second, cash payments are psychologically more painful than card payments, and this pain of payment can curb the impulsive responses to buy unhealthy food items."
The researchers found it was more difficult, or more "painful," for consumers to buy unhealthy food with cash. As such, consumers instinctively feel compelled to buy healthier food with cash, such as fat-free yogurt and whole wheat bread, they wrote.
Similarly, the ease, or "painlessness," of using credit and debit cards to pay for purchases caused consumers to more likely have cookies, cakes and pies in their shopping carts.
Consumers spent up to $15 on unhealthy, or "vice," products when using credit or debit cards, but spent less than $11 on such products when paying with cash, the research found.
Understanding that using plastic increases "vice" purchases may help consumers control their impulsive behavior, the authors suggest.
However, one payments industry analyst counters that demographics, not food choices, are a better bellwether for determining how consumers use cash, credit and debit cards.
In his view, affluent consumers, who may be older and likely healthier eaters, are using credit cards to buy food, while younger consumers who favor using debit cards may be spending more on unhealthy food choices, said Ron Shevlin, an analyst at Aite Group.
Moreover, many consumers who favor using cash may be unbanked and not have payment cards, which similarly would undermine the results of the study.
In any event, associating consumer food choices with payment methods should be the least of card executives' worries, Shevlin said.
"This is pretty incendiary stuff," he said. "If I were an executive in the payments industry, I'd say I have enough problems."