Easy Payments Boost Sales but Not How You’d Expect
- Farhana Tabassum
- Jun 30
- 5 min read
Updated: 7 days ago
Easier payments can drive sales, but not always in the way you think. In one study, more people bought, but each spent less. Net sales still rose. Jump in if you are eager to learn more about how the sales effect masks two opposing processes.
While Europe woke up on a Friday morning, Steven joined us from Sydney, Australia, to uncover the behind-the-scenes story of his paper.
How mobile payments change shopping
It is easy to imagine that long payment queues can quickly irritate customers. Those who work in retail or service industries can recognize the situation. Not only do businesses have to deal with queue management, but more generally, they also risk consumer attrition and slow growth due to more nimble competition.
In this interview, Steven Lu, Associate Professor in Marketing at the University of Sydney Business School, shares how he and his co-author Koen Pauwels offered a solution to both problems. Their paper, “More transactions but a lower average transaction value: How mobile payment apps influence consumer purchases through time-savings”, made it into IJRM’s 41st volume in December 2024. The paper uncovers a dynamic in consumer behavior driven by the time-saving benefits of mobile payments. By streamlining the checkout process and reducing effort, mobile payments lower the friction of purchasing, prompting consumers to shop more often, even if they spend less on each visit.
So, how did it all kick off?
“I worked as a consultant for a Chinese company on mobile payment, which was initiated as a short-term involvement. Mobile payment was only emerging in China at that time, and suddenly, everyone started talking about it.
I was drawn to the project because my curiosity went beyond the limits of my consultancy role, and I believed that finding the answers could leave a lasting impact.
The moment I shared my curiosity to explore further, we were instantly a team. Koen joined us in the meantime, and the project flew off. We moved forward with testing our hypotheses by introducing a mobile payment app for a gasoline pump in China, where walking into the convenience store to clear the payment used to be the norm. We were fortunate to access company data gathered through our field study. We explored how faster, low-effort payments shape consumer behavior and found that making checkout easier reduces spending friction. People buy more often, but spend less each time.”
What made you interested in this topic in particular?
“I always like to do new things. In addition, I love digging deeper.
Whenever a new trend takes off, I feel curious and want to stay engaged and informed. The bubble can be temporary, but the learning we get out of it is what fascinates me most.
New situations can teach us a lot because they either show us something we had not seen before or reveal connections we did not know were there. In my other research, I found myself exploring topics such as the metaverse and Roblox, driven by my curiosity about their immense popularity among young people. However, what really inspires my curiosity is not just the trend itself, but what it reveals about human behavior. I am driven by a desire to understand the deeper patterns behind why people engage with new phenomena, turning short-lived trends into lasting insights. And this is where I appreciate the beauty of academic research, because a trend may come and go, but theories and findings can be long-lasting and transferable.”
How did the review process go?
“It was a long wait, but worth every second of it. In fact, we initially submitted the original paper to another journal and got rejected. However, the comments we received pushed us to reposition and fine-tune the paper. We did not have data from the control group at first [that is, the customers who, instead of using a mobile app, cleared payment at the check-out counter], but we managed to collect it later. We had to calibrate many aspects, such as different days of the week, queue length, types of mobile phones being used to download and pay through the app, and so on. After nearly a decade, our 2015 work finally became a reality in 2024.”
What can we learn from the paper?
“Our paper shows that mobile payments do more than streamline checkout; they change spending behavior. We found that when paying is faster and easier, people tend to buy more often but spend less each time. This challenges the usual focus on the ‘pain of paying’ and highlights time-savings as a key factor in how consumers make decisions in low-friction environments.
We suggest that mobile payment is not just about speed; it is a strategic tool that can attract customers, boost sales, and improve the shopping experience. Businesses that use it wisely will have the upper hand. Many companies worry that mobile payments will not increase sales, but the catch is that customers are willing to switch companies for the convenience of mobile payments. If a competitor offers it and your company does not, you might lose customers. It is a win-win because new customers attracted to mobile payment might spill over into the store and make extra purchases.”
Is there any fun fact related to the paper?
“Back in 2015, it was easier to work and collect data in China. Companies were surprisingly generous with sharing information, which is not the case anymore. Fast forward to today, and this kind of collaboration is a distant dream. It would be nothing but an uphill battle. I cannot even imagine pulling it off now. Good old days!”
Want to know more? To read the full paper, please click here.
Cite the paper: Lu, S. Q., & Pauwels, K. (2024). More transactions but a lower average transaction value: How mobile payment apps influence consumer purchases through time-savings. International Journal of Research in Marketing, 41(4), 761-776.
Tell us about your journey in academia.
“I never planned to be an academic. After I graduated from Nankai University, I moved to Canada to pursue my master's in Econometrics at York. One of my classmates, who himself was not in academia, told me about a professor in marketing science. I also came to know that the professor was interested in carrying out research in empirical modeling and was going to hire a PhD student. With an open mind, I decided to grab the opportunity. Soon after, I started my PhD at the University of Toronto. I explored discrete choice modeling in my thesis, using the transportation industry as its backdrop. The route was full of peaks and valleys, but 20 years down the line, I feel I have a nice work-life balance, thanks to my profession. I enjoy doing what I do, but at the same time, I do not let my work rule my family time.”
Cozy Chat
What is the essence of marketing to you?
“Consumer insights – what consumers think about your product.”
What is the principle that drives you personally?
“Being humble, a part of the Chinese culture which was instilled in me from childhood.”
A morning ritual?
“Preparing the lunchbox for my daughter and checking emails.”
What would you be if you were not an academic?
“Start-up founder.”
What is your favourite pastime activity?
“Playing badminton or basketball.”
Favourite novel?
“I love reading Chinese novels; some of which are authored by non-professional but passionate hobby writers who come from different walks of life.”
Fancy a person who you would like to have lunch with?
“Liu Cixin, author of ‘The Three-Body Problem’, where sci-fi fuses with the legacy of China’s cultural revolution, weaving a story that stretches across time and space.”
This article was written by
Farhana Tabassum
BI Norwegian Business School
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