Mobile Payment Apps Increasing, and So May Your Debt

mobile payment apps could facilitate overspendingBuying something by simply waving a smart phone in front of a scanner is becoming the new and popular way to shop, but buying a delivery pizza, cup of coffee, or a number of other things now that and others want in on the trend, could cause shoppers to spend more than they would without the mobile payment applications.

A Sprint official said on Monday that the company is moving to eventually have near-field communication (NFC) chips inside its phones so they can be waved at the cash register to buy, with the bill showing up on the customer's credit card statement and not on their cell phone bill. Starbucks is leading the way, with 3 million customers using its mobile payment service since it was introduced in January."Any time you make spending money less tangible, you're going to see increased spending for folks who already have problems with spending," Michigan psychologist Sally Palaian said in an email interview with WalletPop. "By less tangible, I mean removing the purchase from your consciousness, and less connected to your paycheck, your available funds, and other bills that may be due."

"Whenever there are a few steps between spending and the reality of money, you'll see increased spending," Palaian said. "It's human nature to fantasize that it's not really costing you anything."

While the apps are a convenience for people who can manage their money well, they can be problems for compulsive debtors or people who may be covering up the fact that they like to buy, she said. When a purchase is instantaneous and quick, it removes the moment of pausing to think if the item is needed, she said.

Mobile payment apps have a "wow" factor that also increases spending by making people more comfortable when shopping, said Spencer Belkofer, who owns Internet marketing firm Lumin and has several reports on the apps.

More retailers are letting users create a products "wish list" of items they want to buy but haven't yet "pulled the trigger," Belkofer said, which urge consumers to buy things they might not have otherwise purchased. Retailers will contact them via text message or email to let them know when the price of their "wish list" product has dropped, he said.

By next year, half of all Internet purchases will be done with mobile apps, Belkofer estimated. Part of the appeal of some mobile shopping apps that let people scan barcodes through apps such as Redlaser is that beyond getting more information about a product, they can see what their friends are buying, he said. Mobile shopping apps give companies credibility by being on top of technology, he said.

"They want to shop at a company that appreciates their wants and needs," Belkofer said of app-happy customers.

Some apps may get people to buy more without their knowing it because the apps aren't directly related to shopping. For example, puts recipes in your hand so that you can plan dinner on the go and go to a grocery store with the list of ingredients at your fingertips.

Some apps, such as CheckPoints, encourage spending by giving rewards points that can be redeemed for prizes. All people have to do is check in at stores and scan products.

It sounds easy and fun, but maybe not so fun when the credit card bill arrives.

Aaron Crowe is a freelance journalist in the San Francisco Bay Area.
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