The Positive and Negative Impact of Psychological Aspects of Mobile Payments on Children’s Money Behaviour
Mobile payments are now conventional in the financial sector and have transformed the way people conduct themselves when it comes to money. It is now possible to make payments, send money and even manage our expenses easily and conveniently within the comfort of our homes through the use of our mobile phones. These are developments that have primarily been useful for adults and therefore it is important to ask how they impact children’s perception of money.
The Emergence of Mobile Payments
Within the last ten years, mobile payments are reported to have grown rapidly. According to Statista, the total value of mobile payment transactions is expected to reach $4.7 trillion by 2023. The following can be mentioned as the key drivers of the trend under analysis: The availability of smartphones, the development of contactless payment technologies, and the popularity of digital wallets.
Children and Mobile Payments
As a result, more and more children are exposed to mobile payments as they are. They can sometimes see their parents making mobile payments or even use these apps themselves. This early exposure determines the extent to which they are likely to be comfortable with this form of money management. Nevertheless, a major issue is whether this is helping them to become financially literate and good managers of money. Cash and debit cards are more direct ways of handling money as the consumer can actually see the money being spent. On the other hand, mobile payments may separate the act of spending from the consequences of spending which can only be detrimental to the development of good money habits.
The Psychological Implication
Mobile payments can be beneficial and adverse to children’s financial behavior and it is crucial to know the impacts to avoid the negatives and promote the positives.
1. Impulse Buying:
Mobile payments have made it easier to make purchases on the go. Kids can buy things without having to think too much about what they are buying or whether they really need the thing they are buying. This may pose a problem with regard to self-discipline and high levels of spending.
In a study carried out by the University of Chicago, it was established that children who made use of mobile payment applications made more impulse buys than those who used cash or other forms of payment.
2. Delayed Gratification:
This is because delaying gratification is crucial for financial success. It is the ability to forgo immediate rewards for future gains. Mobile payments can be a problem in this area because it provides the consumer with money that can be spent right away, instead of having to save up for large format purchases.
Take a child who has been using mobile payments frequently – he or she will not be able to refrain from buying the new video game right now and not in a year’s time when they can afford to buy it.
3. Financial Awareness:
Mobile payments may negatively impact children’s understanding of the value of money and budgeting. When children do not get cash or even watch the balance of their accounts decreasing, they may not understand that money is not an infinite resource and that financial decisions should be taken wisely.
According to a survey conducted by the National Endowment for Financial Education, 62% of parents believe that the use of mobile payments is confusing to children in terms of the value of money.
Encouraging Healthy Money Habits
However, there are some threats that mobile payments bring to children’s money management, there are ways for parents to turn it into a positive experience:
– Establish specific guidelines for the use of money and advocate for the development of a budget.
– Encouraging the child to wait for the things that he or she wants can help in the development of savings goals and rewards for the child when they achieve the goals.
– Teach children about the value of money by including them in financial conversations and decisions.
– Watch and talk about their mobile payment transactions with them to help them develop an understanding of and control over their spending.
Conclusion
Undeniably, mobile payments have revolutionized the way that people handle their money, but it is crucial to consider how it affects children’s financial behavior. Although these facilities can be useful, they also have their set of drawbacks in the area of financial discipline. Therefore, it is crucial to understand the psychological factors and how to encourage children to develop positive money behaviours as they navigate the world of mobile payments and build a solid financial base.
