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The role of digital payments in overspending behavior: a mental accounting perspective

Mohay Ud Din Shah (Institute of Management Sciences, University of Science and Technology Bannu, Bannu, Pakistan)
Ikram Ullah Khan (Institute of Management Sciences, University of Science and Technology Bannu, Bannu, Pakistan)
Naimat U. Khan (Cardiff School of Management, Cardiff Metropolitan University, Cardiff, UK)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 11 June 2024




The paper examines how individuals can be susceptible to payment biases in the context of digital payment behavior by utilizing the concept of mental accounting. Furthermore, the paper investigates the moderating effects of Digital Financial Literacy (DFL) on the relationship between payment methods and spending behavior.


The study employs a survey-based approach to collect data from 503 individuals who use digital payment methods, utilizing purposive sampling from Pakistan. The collected data is analyzed using Smart-PLS 4 software to assess the direct impact of payment methods on spending behavior and the moderating influence of DFL.


The research findings demonstrate that both digital and cash payments significantly affect spending behavior. However, digital payments have a more substantial impact on spending behavior compared to cash payments. The findings also show that DFL significantly positively moderates individual spending. The study validates the mental accounting perspective by evaluating the direct impact of payment methods on consumers' spending behavior.

Practical implications

The findings have practical implications for policymakers, financial institutions, and educators. Policymakers can leverage the insights to design effective strategies that promote responsible spending behavior and enhance the adoption of digital payment methods. Financial institutions can design user-friendly platforms that cater to users' spending preferences, while educators can develop programs to enhance Digital Financial Literacy (DFL) among the public.

Social implications

This study’s social implications lie in its potential to contribute to individuals' financial well-being by promoting responsible spending through digital payment methods. Enhanced financial literacy and informed spending decisions can lead to better financial management and ultimately contribute to societal financial stability.


The study enriches the understanding of mental accounting, shedding light on how overspending behavior can manifest through digital payment channels. In addition, this research practically provides valuable insights into enhancing the adoption and financial literacy of digital payments among the public.



Shah, M.U.D., Khan, I.U. and Khan, N.U. (2024), "The role of digital payments in overspending behavior: a mental accounting perspective", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print.



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