Improving the Technology of Money Extraction

There is a regular publicaion in my profession called The Journal of Economic Perspectives (JEPs). Sounds fascinating, eh? It kinda actually is, for two reasons. One, it has no paywall, so anyone can read it, even you (the latest edition is here if you care to dip in). Two, it is expressly designed to be non-technical, so folks who have not been warped by years of economics instruction can perhaps learn something from it. (Note please that I am not claiming it is a real page-turner.)  I certainly found articles in it that I could put on my course reading lists from time to time back in my teaching days.

A regular feature in every issue is a section called Recommendations for Further Reading, which points people at articles and interviews and other things the editor thinks might be interesting. The latest edition includes a blurb about a new paper by economists Julian Morris and Ben Sperry which I do find interesting, titled “The Cost of Payments: A Review,”. You can read it yourself, if you’re brave, here.

If you’re not that brave, here is a synopsis of what is in the paper, according to JEPs:

“Atlanta’s Mercedes-Benz Stadium in 2018 became the first major sports venue in the United States to switch to a fully cashless payment system. At the end of the new payment model’s first year of operations, the stadium reported that wait times had fallen by 20 to 30 seconds and per-capita food and beverage sales had risen by 16%, while saving more than $350,000 in operating expenses. . . . In short, the evidence shows that, when all costs and all parties to a transaction are considered, electronic payments (debit cards, credit cards, and mobile payments) are more cost-effective than cash for most transactions. The main reason for this is that electronic payments enable consumers to spend more than they have in their wallet, which results in ‘ticket lift’ for  merchants. Card rewards, including cashback and merchant- specific loyalty programs, further increase this ticket lift. In addition, ‘tap-and-pay’ contactless payments can reduce the time it  takes to tender payment relative to cash, especially when cash payments are eliminated altogether.  This increases throughput, improving the customer experience and reducing labor costs.”

I know that nothing increases my experience as a customer quite like improved throughput. And spending more than I have in my wallet is what I am counting on being able to do in heaven if I get there, and here the folks at M-B Stadium have found a way for me to do it while alive. That, my friends, is surely nirvana. But the benefits of ‘no cash allowed’ don’t end there. Think of all the useful, productive things customers at the M-B Stadium are able to do with those 20 or 30 seconds they would otherwise spend in line. The possibilities are endless.

Really, though, the best thing about this synopsis is that it taught me a new term: ‘ticket lift’. What an absolutely precious way to describe inducing people to spend more money at your venue.

I am sooo happy to see the esteemed members of my former profession putting themselves to good use, studying ways to better extract money from people as they acquire all the key ingredients for a happy life.