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Why do many consumers prefer to pay now when they could pay later?
Author(s) -
Agrawal Arvind,
Gentry James W.
Publication year - 2019
Publication title -
journal of consumer affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.582
H-Index - 62
eISSN - 1745-6606
pISSN - 0022-0078
DOI - 10.1111/joca.12292
Subject(s) - payment , payment card , business , salience (neuroscience) , cash , marketing , credit card , heuristics , actuarial science , debit card , economics , finance , psychology , computer science , cognitive psychology , operating system
Payment timing is conceptualized as a payment characteristic useful in explaining motivations to prefer payment types. Cash, debit cards, and online banking represent consumers' preferences to pay now, while credit cards and loans represent the inclination to pay later. Based on a grounded theory study, a payment‐timing model is developed to theorize consumers' choices of payment types with differences in payment timing. The model presents four motivations for payment‐timing preferences: (1) the extent of rewards salience, (2) the perception of financial stress, (3) adopting heuristics for money management, and (4) the influence of perceived financial ability. Consumers choose payment‐timing options that best suit their financial strategy to manage payments in pursuit of their consumption objectives.