The New Apple Pay Is a Really Cool Way to Drain Your Bank Account


The more I think about it, the more I’m convinced something genuinely terrifying was introduced to the world at Apple’s much-hyped special event in California on Tuesday. Apart from a new U2 album, I mean.

The Apple Watch and new iPhones have been garnering most of the excitement, sparking joy among fans of small glassy screens and slightly larger glassy screens alike. By comparison, Apple Pay – which will let iPhone 6 users in the US make contactless payments with their phones – appears somewhat less cool. For one thing, contactless payment isn’t new. For another, as Neil Irwin argues at the Upshot, it seems like a solution in search of a problem. Apple has been doing its best, this week, to make credit cards sound like a hugely tedious, old-fashioned hassle: “Gone are the days of searching for your wallet. The wasted moments finding the right card. The swiping and waiting.” But “buying things with a credit card,” as Irwin writes, “isn’t nearly as onerous a process as they make it out to be.”

At best, then, Apple Pay seems like a tiny extra convenience. At worst, it’s merely pointless. So why does it scare me? Because Apple Pay brilliantly exploits various truths about the psychology of money – making it much, much easier than it already is to walk through the world hemorrhaging money with barely a thought.

It’s true that the difference in effort between waving your phone and swiping your card is tiny: as Irwin writes, nobody ever knowingly failed to buy a coffee due to the extra exertion of using plastic or cash. But if there’s one thing we’ve learned from decades of behavioral psychology, it’s that almost unbelievably tiny impediments or incentives to action – “nudges” – can make all the difference. School students eat a healthier lunch if the fruit and vegetables are slightly easier to reach than the fries and donuts. Placing an image of a fly on a urinal as a target, reportedly solves the, um, splashing problem almost completely.

Sure, I’ve never knowingly failed to buy a coffee because the payment process was too onerous. But who knows what was happening less consciously: the split-second decision about whether to stop at Starbucks while hurrying to catch a train, or the barely perceptible resistance to fishing out my wallet if it’s at the bottom of my bag… By contrast, half the residents of my neighborhood seem to live with their phones permanently in one hand. (And it won’t be long, surely, before Apple Pay is all about the Apple Watch: just wave your arm vaguely at checkout!) Think of those thousands and thousands of potential transactions per day, all rendered a very tiny bit easier. Once a large chunk of the population is using Apple Pay for almost everything, the numbers will swiftly add up.

But there’s something even scarier: Apple Pay and similar technologies will make the experience of spending more abstract, and thus easier, than ever before. The behavioral economist Dan Ariely studies a phenomenon he calls the “pain of paying”. In shops and restaurants, he has found, the more concretely it feels as if you’re handing over your scarce cash, the more you think before you spend. That’s why people are more profligate with credit cards than cash. (As the godfather of nudge, Cass Sunstein, noted in his Bloomberg View column this week, that’s not just because you’re buying on credit: a similar effect has been observed for debit cards, too.)

Yet at least using a card requires me to make a mental switch into thinking, a little bit, about my bank balance. Apple Pay will live on my phone, which I mentally associate with the friends and colleagues I call and email from it, the tweets I read and send from it, the photos I take with it, the food menus and cinema schedules I check on it. How dangerously easy will it be to wave it thoughtlessly over a contact point? And contactlessness makes matters worse. There’s something about the physical contact of a traditional credit card with a card-reader machine that focuses the attention on what’s really happening, the fact that all those big retailers using Apple Pay will be only too thrilled to help me ignore – which is that I’m parting with real money, of which I don’t have an infinite amount.

Yes, yes, I know I could just not use Apple Pay. For a while, I’m sure I’ll resist – not least because I have no plans to upgrade to an iPhone 6. But I can’t see my resistance enduring. After all, if willpower were such a dependable strategy, none of this would be a problem in the first place.

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