• Sally Khallash

Case Study: Cash Payments vs. MobilePay

Updated: Mar 22, 2018


(Associate Tine Lund together with Founding Partner Sally Khallash - who can resist!)


Have you ever tried to help a charity by raising money?


This can be hard work. Throwing fund raising events or going door-to-door and asking for contributions is not how most people want to spend their time if they have to be completely honest.


So we decided to hack it.


Take a look at this chart:

This is the actual distribution of donations achieved by The Danish Refugee Council in their big door-to-door fundraiser this past Sunday. More than 800.000 people donate 15 million and the funds are a very big part of the annual budget of the NGO.


Channel B is the traditional cash distribution where people look in their pockets or wallets for change. Channel A is payments via Mobile Pay - a very popular payment app in Denmark.

At first glance it looks like the traditional cash donations are beating the app-payments by a large margin - about 5:1.


When you look closer, however, another picture emerges:



In other words: people pay 5x as much if they pay via mobile app than if they pay via cash.

FIVE TIMES!


It works like this:  When people open the door and see a person collecting for charity they run this mental process:

  1. Do I want to give?

  2. How much do I have?

  3. How much of this do I want to give?


Step 1 is largely determined by peoples predetermined opinions, if they like how the person asking looks and what they are occupied with at the moment you ask them - if are they hurrying out the door or in the middle of a tough conversation with their spouse it's very easy for them to just reflexively say 'No'. Case closed.


Step 2, however, is where we decided to set it. The 'How Much Do I Have' depend on where people choose to look:

  • In their trouser pocket - they give an assortment of coins.

  • in their wallets - they give small bills.

  • In their.... phone? Now what?

And it is exactly this 'Now what?' that drives the big increase in donation size - because when people look at the actual cash they have on them their donations are anchored to the medium of payment: either coins or bills. And it hurts too much to give everything, so most people give just a portion of their cash (like all the small bills only, or just the coins etc.).

But looking at our phones we are anchored to different amounts and payments like: "How much do I usually pay using this app?" and "How much is in my bank account?" and "What can I afford to give?". And all of these numbers are multiple times higher than the cash most people have laying around these days.


Step 3 then becomes a factor of what happened in step 2 - but adding to this the fact that we feel the pain of paying far less when we pay with any kind of digital medium. If you plug electrodes to peoples heads their brains light up in the same way if you ask them to pay for something as if you pinch them. It's real pain. But we feel it significantly and reliably less if we pay with credit cards (and app's - it seems).


So to sum up Step 1-2-3 above:  Step 2 is extremely psychologically dependent on the method of payment - and Step 3 is largely a factor of Step 2.


So The Danish Refugee Council is collecting 17% of their 2017 donations via only 3-4% of the actual people donating - because those people happened to pay via the Mobile Pay app.

It looks like this:

(numbers are rounded estimates a day after the fundraiser - data provided by DRC)


So how do we get more people to use the mobile payment channel?

Our thinking was simply to reject cash payments. If people don't have the option and are asked to use their phones then:

  • You gain the increase in donations from people who are moved from cash to mobile.

  • You loose the donations from the people that don't have the mobile payment option.

The big question of course is whether the first outweighs the latter. We decided to run a small test:

(Associate Tine Lund together with Founding Partner Sally Khallash - who can resist!)


We hit the streets last Sunday and collected for The Danish Refugee Council, ringing 480 door bells, but asked only for payments via Mobile Pay.


We had two questions:

  1. How many people would be unable to donate?

  2. Would the average mobile pay donation remain the same?

The answers were: "About 20% of donaters" and "Yes" - our donation average was actually a little higher at 85 DKK.


Assuming the 20% inability scale up to a national level the Danish Refugee Council would have been able to collect not 15 million last Sunday but 50.1 million - a 234% increase!


From a statistical point of view (and a common sense one too) this 'experiment' is of course vastly underpowered - we'd need to run a significantly larger test to build enough confidence in the case to advice The Danish Refugee Council to start rejecting cash payments.


But the underlying insight is significant - how many of us are sitting on payment data and associated insights into how much our customers are willing to pay in different circumstances and not doing anything about it?


Status quo is - after all - a far safer territory to be in. The 15 million is predictable. And you can always comfort yourself with the little boost you get from the few (3-4%) of donaters who choose the more generous payment platform.


But ask yourself: Are we not acting on data like this because we don't know how to interpret it - and dig into the underlying psychological mechanisms that cause them? Or is it simply because we are too afraid to take the consequence of the sometimes counter intuitive and 'irrational' insights that jump out?


Do you have a +234% increase hidden somewhere in your business?


Behavioural Strategy Associates
St Kongensgade 72
DK-1264 Copenhagen
E: Office@behaviouralstrategy.com
P: (+45) 2217 1107