Google may be changing the way we spend money now. One of its latestventions is Google Wallet – a virtual wallet on your Google-powered Android phone. Simply add your accounts to Google Wallet, and you can tap your phone on card readers using technology like PayPass.

That's not to say Google is the only one thinking about transforming our payment system. Apple is said to release similar technology in its updates to iPhone and iPad. How does that affect you – the business owner – who's wondering if this is worthy technology to invest in?

I submit to you the recent arguments made in a recent Journal of Consumer Research about our spending behavior related to credit cards. In an article entitled, "Do Payment Mechanisms Change the Way Consumers Perceive Products?" by Promothesh Chatterjee and Randall L. Rose, the research points out that people who use plastic are unconsciously willing to spend more than those who pay with cash, a phenomenon known as the "credit card premium." That's because there's an emotional pain associated with handing over hard currency that curbs spending, as opposed to mindless purchasing when forking over plastic. *

In fact, many money management experts suggest that trying to follow a strict budget should consider only dealing in cash because of the conscious behavior of handling money makes it easier to restrict spending.

The study included in the Journal article concluded that participants who were exposed to the idea of ​​paying with a credit card, "people attend more to benefit aspects of a product." The opposite occurred when people were primed with the idea of ​​payment by cash. People were more likely to question the costs and benefits associated with the product when they needed to hand over actual money.

What hypothesis would you then draw about the introduction of payment by tapping your cellphone? Google has removed cash again by another degree. Will the virtual distance between your customers and their money have a positive affect on your sales?

Like many technologies, we will not know if it catches on. We'll have to see if the public embraces the idea. But, if iPhone does introduce a similar technology that is compatible with the same payment systems, I predict we'll be seeing more people using Google Wallet and like products. My hypothesis is that technology like this will have a positive effect on spending. Retailers who embrace the technology early may be able to reap the early increase in money spent per transaction. While it'll probably help you – business owner – we'll have to see how it affects the spend-happy consumer. Google and Google-Wallet-participating dealers will make it even more enticing by offering coupons while you shop.

* Direct quote from Cash vs. Credit Mindset by Gregory Karp from the Chicago Tribune

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