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Low Friction and Invisible Spending

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Apple Pay will be a game changer. It was by far the most interesting thing IMO to emerge from the recent Apple announcement. Recall that great hardware is often simply a loss leader for the transactions it enables. Adoption may come slowly, but it will come.

I love removing friction from transactions. I bought a Coin (probably already extinct) and love using apps live Cover and Uber to ‘invisibly’ make payments. However — there is no doubt in my mind that the decreased friction increases the frequency (and possibly size) of my transactions. I’ve found myself on Amazon buying things I don’t really need simply because Amazon and Prime make it so easy. I’m extremely fortunate that I can afford to make some needless purchases here and there but I’m also lucky that I grew up understanding the value of money and thus have decent self-control as to how I spend my earnings.

My concern with new technologies like Apple Pay is that while the financially fortunate relish making their lives easier (often by spending more to save more time) — many folks can’t afford to spend more. Period. People love to say ‘time is our most precious resource’ – but I believe that’s only true to an extent before there are diminishing returns.

Impulsive purchasing is a real problem for many and there’s no question it is exacerbated by making spending fun, easy and invisible. Bored? A $2.99 game or new song is a click away. Hungry? Seamless web is so much easier than cooking. Just the ease with which we can evaluate and buy items on Amazon means we don’t need to wait for the annual shopping trip to the big city. Impulse buying and not bothering to return is like a new ‘breakage’ model. While many middle to lower income folks cannot currently afford an iPhone, frictionless, invisible payments will no doubt be eventually be pervasive across most phones. I think this could be a real issue for younger generations who begin to spend money that they never really see and who get sucked into the cool new app that provides some marginal benefit (slight time savings or slightly elevated level of service) for only a few dollars. Those dollars add up quickly.

It also all makes you wonder: who ultimately bears the responsibility?

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