Abstract

This article examines how payment transparency affects consumers’ pain of paying and spending behaviours. Through one pilot study and two main studies, we provide some empirical evidence that low-transparency instruments do a better job of mitigating the pain of paying than transparent ones, encouraging consumers to spend more. In the pilot study, participants spent more when payment transparency decreases. However, the difference was not statistically significant. Study one replicates and supports the long-established finding that credit cards facilitate significantly more spending than cash, but no other results were found significant. Payment transparency did not have a systematic impact on consumers’ willingness to pay, and the moderation role of the pain of paying was not observed. Study two provides further evidence that there is a negative relationship between payment transparency and willingness to pay. For Chinese, mobile payments promoted more spending than debit/credit cards and cash. On the contrary, for Canadians, mobile payments were not superior to debit/credit cards, but credit cards facilitated spending most. We identified that individual characteristics like debt aversion (negatively) and impatience (positively) directly impact willingness to pay. Moreover, debt aversion moderated the payment transparency effect for Chinese subjects – those with a strong debt aversion spent significantly more when using opaque payment methods than transparent ones, and those with a low debt aversion spent similar amounts regardless of payment modes. This paper contributes to the payment transparency and the pain of paying literature by investigating different payment methods, including the overlooked mobile payment, and their impact on consumers’ consumption behaviours.