Girl Math: Inside the psychology of payments // Money Isn't Everything 1x05

Welcome to Money Isn’t Everything.

I’m Mary Wisniewski, Cornerstone Advisors editor-at-large.

Every other Thursday, we bring on a guest that is shaking up financial services in some way, and we get into the why, how and the possibilities.

In this episode, I sit down with Sophia Goldberg, the CEO and co-founder of Ansa, a fintech company that helps brands offer their customers digital wallets.

She’s also the author of The Field Guide to Global Payments, and she worked on Hillary Clinton’s financing during her campaign.

She was also named one of American Banker’s Innovators of the Year this year, and we’re going to find out who the winner is at the end of June.

This episode is for anyone who wants to learn about digital wallets, a bit about the psychology of payments, and one of the buzzy TikTok trends that started taking root last summer, girl math, and what it means for financial services and fintech execs.

Here’s our conversation.

Sophia, it’s great to have you on Money Isn’t Everything.

Welcome to the show.

I’ve already been following your tweets, so I’m excited to find out more of that brainpower of yours in today’s conversation.

So welcome, first and foremost.

Thank you, Mary.

Thanks so much for having me.

Hope it lives up to the Twitter hype.

I know.

I’m putting the bar high because I feel like we’ll live up to the hype.

I think we’ve got a good chance.

Yeah.

Well, you know, I think one of the things we should get into, because I know you followed it, is there are all these TikTok personal finance trends.

And one that hit hard last year actually was girl math, which went viral, has that name, which is a bit offensive.

But I wanted to unpack it.

Just to set the stage a little bit for maybe the audience members who don’t know what that is, it’s like coming up with reasons for your spending decisions.

Like if it’s under $5, it’s free kind of thing.

I don’t normally start the show this way, but I think it sets it up perfectly for “That’s What You Said.”

But in this case, it’s “That’s What You Tweeted.”

And you wrote, “Forever grateful to the TikTok girlies for creating girl math so I don’t have to say consumer sunk cost fallacy psychology anymore.”

So let’s get into that.

What do you mean by that?

And tell us your take on girl math.

Yeah.

And that really is a sincere tweet.

A lot of what we work on here at Ansa, and what I focus on, we talk about consumer psychology a lot.

Anything when you’re trying to change behavior.

And one area is sunk cost fallacy and the psychology of consumers for things like wallets and gift cards and stored value and cash.

And so the whole idea of girl math has just been so delightful because it puts a really, really clear word in the everyday lexicon of something that all of us, regardless of gender, have experienced.

Like, I pulled out cash one weekend.

Everything I buy with this cash is free.

Or someone gave me a gift card.

I spend it, it’s free.

Or my favorite ones are, oh, the money in the Starbucks app doesn’t count because it’s free.

Or you get a refund and so you spend more because it’s free.

And I think what I love so much about the idea of girl math and kind of the meme it became, and then there was dog math and all these like...

Yeah.

Like if you were eating food in front of your dog, they deserve some.

Dog math, right?

Oh, I believe that one.

That one stands up.

Yeah.

As also a dog mom, I also agree with that one.

But I think it gets at something that I think is really important, which is it recognizes kind of this value of time, convenience and money being interchangeable currencies for consumers.

And value being more broad than just the dollars you have with the brand.

And I think it pokes fun in a way that we realize we are just these kind of funny animals as humans.

And you can be so aware that, man, I’m going to spend a little bit more because I got a refund as stored value, and I’m okay with that.

And I think what I love so much is the lightheartedness of it too.

It’s not like, oh darn, I have no self-control.

It’s like, it’s girl math.

It’s fun.

It’s bubbly.

Because at the end of the day, I’m getting goods and services I want.

We’re getting value as consumers in these exchanges.

And so it’s not some bait and switch.

It’s just this kind of joyous part of being an everyday consumer.

Yeah.

I think I really like it.

I guess an example would be like an expensive handbag, but you use it so often that the price goes down on a daily basis.

I feel like, you know what, that sounds like something even a personal finance person might say.

Oh yeah.

I’ve totally been like, okay, how do I amortize this jacket over the next 10 years?

What is it actually going to be per wear?

Two dollars?

Yeah.

Well, would you, I imagine not every fintech founder, certainly not every bank or credit union executive, has been following girl math.

What do you think the takeaway should be for them?

You’re describing it as the way that people actually use their money.

But if there was one takeaway for someone who was like, what does this even mean, what would you say?

I think the main takeaway, one, I’m not even on TikTok anymore, so I get them on Instagram Reels a month later.

But I think it perks people up.

The 50-something to 70-year-old execs that I talk to and bring this up with, they may not have heard of girl math, but I think what it helps is everyone can really quickly understand what it means and see it in their own day-to-day lives and spending habits.

I think the most important thing about what brands should understand about it is the psychology of payments and purchasing and how to change consumer behavior and make things feel like a win-win.

And I think that’s the really interesting part.

Like I said earlier, it’s not this, oh, girl math tricked me again.

It’s this joyous kind of, oh, I did this thing that maybe is a bit financially silly because I know better, but I’m feeling okay about it.

I’m feeling good about it.

And so I think if brands are able to harness that kind of, regardless of if it’s with things like money in the Starbucks app, are able to harness that, you provide goods and services that give people that, even though they’ve been a bit bamboozled by themselves.

But the best of us are, right?

And it happens to me all the time.

And of all people, I should know better.

But it’s there.

So I think that’s a piece of it.

And that it can be a competitive advantage.

So if you can find ways to give this kind of, to kind of manufacture it a bit in your product, that can go really far as well.

And so that can come in the form of rewards, in terms of gamification, in terms of how to help people rationalize purchases.

So I think buy now, pay later did this really well.

On the screen for a product it might say, okay, it’s $200, and they say, or it’s four payments of $50.

Yes.

Right?

And so I think there are a lot of different applications for how to think about consumers are trying to rationalize purchases if they have high intent.

How can you help both the experience and the value exchange make sense?

I think this is a perfect moment to mention how you’ve written a book about global payments, The Field Guide to Global Payments.

So I have to imagine your mind is just like someone who loves following the history of payments, including the present.

How do you see something like this trend today with that perspective of having written this book describing all the bits and pieces?

Yeah.

I think I’m just generally a huge payments nerd, and I’ve spent the better part of the last decade working and building and now founding in payments, and writing and publishing in payments.

And I think one of the pieces I love most about the industry, and has kind of been a theme through everything, is I love what I like to say is the physical mechanisms of how our international economy works.

And payments is one of the nuts and bolts of trade, alongside things like freight and shipping and manufacturing.

And I really see our role as a utility for commerce.

And I think where girl math kind of falls in that is we’re in this era of huge consumer choice in terms of convenience.

There are plugins like Honey to get discount codes.

It is really a battle for consumer spend, consumer mindshare.

And so if you can capitalize on these things that make consumers feel like they’re winning, and they actually are, don’t trick consumers, build long-lasting relationships.

That’s a lot of what we focus on at Ansa, driving that retention and frequency, and at the end of the day, revenue, LTV for your best customers.

I think what really matters is things like girl math.

How can you create these experiences that help buying feel a little more fun, a little bit more of a no-brainer, especially as people have to tighten their belts financially, so that your brand becomes one of those no-brainer decisions for them?

Well, yeah, let’s get into that.

Because I think part of this stage that we need to set is what’s broken with gift cards.

I’ve heard things, of course, like fraud is rampant on gift cards.

Also, tons of people don’t actually use their full balance on gift cards, so it just becomes like a wasted thing almost.

But I’m just curious because of what you’re building, what are you seeing as the problems with a gift card, and also how you’re trying to remedy those issues?

Yeah.

So I think there are a lot of positives and negatives about gift cards.

I think the biggest negative I see is that they get used when they’re not the best payment method.

Gift card has kind of become a catchall for prepaid payments because it’s infrastructure that exists.

But, for example, the global gift card market is over $2 trillion by 2030.

It’s a huge amount of money.

Yeah.

It’s a really, really huge amount of money.

I can’t even understand that number.

Exactly.

And I think in 2022, Americans spent like $30 billion on gift cards.

It’s really massive volume.

And I think there’s a lot that it’s good for, which is marketing, to be on an end cap at the grocery store or in Costco.

It can be a cash flow tool for brands.

It can be a great way of, maybe other generations prefer it as a gifting mechanism, to send your niece or nephew a gift card to a place you think they might like on their college campus, something like that.

That’s a really powerful use case for it.

But what it lacks is flexibility.

A lot of them aren’t super digitally native or omnichannel.

I think the other piece that we care a lot about, and what gets at some of the fraud vectors, is it’s an anonymous liability for a brand.

They don’t know where this unused gift card sits.

Is it in a sock drawer?

Is it in a dump?

Is it with someone who’s going to come in next week?

So from a financial planning and analysis perspective, it’s difficult.

From accounting of these liabilities, it’s difficult.

From how do you reengage someone to use that and then spend more, that’s impossible because it’s not tied to a consumer.

And so I think there’s a lot there that makes them not the best solution for, say, driving loyalty or retention or actually being like a branded payment instrument.

And they can also be expensive.

So I think that’s the other aspect.

And the reason they’re expensive is they can drive top of funnel.

You can meet new customers by being and selling your brand’s gift cards at Costco.

But I think we’ve kind of moved past needing them in a lot of use cases, and still that’s the tender type that gets used for, you know, we help brands launch custom-branded wallets.

A lot of merchants will end up using just digital gift cards for that.

And I think there’s a big gap on experience, on economics, on what you can do with that data as well.

Yeah.

Well, let’s unpack that because I know you’re working with especially coffee shops, right?

The shops where the dollar amount would be lower, generally speaking.

And I think I read, it must have been an article, but you were describing how a digital wallet is actually a retention tool.

So how do you see that?

What are the metrics that you follow for that?

And how is it working now, like the coffee shop approach?

Yeah.

So I’ll just give the quick little plug on why things like this.

At Ansa, we let any brand launch a modern wallet.

Closed-loop stored value is another way to say it.

It can look like the Starbucks in-app payment experience, but not on gift cards, is the way we do it.

It can also look like a bus card.

There are so many parts of daily life that consumers have actually already interacted with pieces of technology or payment methods like this.

And so I think what we think about is it’s a really great retention and frequency-driving tool because part of it is girl math.

Someone has put money in there already.

There’s intent for those next purchases.

So from a forecasting perspective, you know Mary’s going to come a second, a third, a fourth time if you’ve already loaded enough funds to cover four or five coffees.

I think there are easier ways to then incentivize you to keep coming back, to help build that habit.

You might be more likely to drive an extra five minutes to the brand that you have that balance with.

And in the age of convenience and great marketing and offers, what are new tools to help brands keep their most loyal customers their best, and drive that incremental revenue and frequency?

And so some of our customers have been seeing up to a 30% increase in frequency from consumers who adopt the wallet.

And so we tend to equate that to a few more orders a month, which is really, really massive to protecting that longer-term loyalty.

And I think the other side is you can then power really well-understood rewards to the wallet.

Point systems are really great.

A lot of our customers also have really awesome points-based loyalty systems.

We call ourselves loyalty with a little L, I like to say.

And so why?

How is that your, what made you like the little L?

Yeah.

I think part of that comes out of we help drive loyalty, and then brands will say, oh, well, we have loyalty.

And I’ll be like, yes, you do.

You have loyalty with a big L.

You have SKU-based data and the marketing engine behind it and a point system and tiers and gamification.

You have all these phenomenal things.

What we do can superpower a lot of that.

You can use your points program alongside a wallet.

But what we help with are incentivization sides that get at payments, that get at stored value.

So think of that as things like dollar-based reward bonuses for, add $50, get an extra five that the merchant would fund.

And so the consumer can really understand five free dollars, five extra dollars.

That’s basically another coffee.

Whereas then they’ll also accrue points on spend.

It can also be cash back.

So come 10 times this month, get $5.

Spend $100, get X amount.

And so really that both girl math side, but also the psychologically obvious side, how can we make it really clear to consumers what value they’re getting and then spending with.

And if you’re giving them that extra five, maybe they buy a latte for a friend for eight or they try a new item.

And so you actually, by giving people it, tap into that consumer psychology.

It’s really clear for a consumer to understand the extra value they’re getting into their wallet.

Yeah.

No, that makes a lot of sense.

Because when I was first looking at your startup, I was really thinking, hey, I live in a rental building in Los Angeles and it’s kind of an old building.

It was requiring quarters to do the laundry.

But of course there was that false shortage of coins during the pandemic.

And by false I just mean they weren’t circulating.

Somewhere in there, the landlord changed it where it’s like an app.

So now you put money on the app to then pay for the laundry, which caused another problem because some people in this building don’t have bank accounts.

But it took me a moment.

I was like, I’m just going to do $5 each time.

Who knows if I’ll ever do laundry in this?

Maybe I’m moving.

But slowly, slowly I bumped into 25.

I haven’t gotten any perks.

But I’m wondering from your point of view, in a way it requires trust of the consumer.

Or maybe I’m just someone who is, I can’t handle the high stakes of $25 at my local laundry machine.

I don’t know.

But do you think this is an issue that would come up for other people, or the rewards are what would eliminate this?

So I think certain use cases, the rewards can eliminate it for sure.

I love that you bring up the laundry example because that’s a really great one where more and more laundromats and other platforms like that have gone digital.

You don’t want to send a 50-cent charge to the card networks.

You end up in the red.

That is not a great one-off payment to do.

There are some great companies and technology providers in the laundromat space that are working on some stuff.

And we’re talking about maybe being able to power some of these wallets for them as well.

I think what you get at is interesting.

And I think on two sides.

For less utility day-to-day life, the incentives help.

You have a lot of choice when it comes to coffee.

You have a lot of choice when it comes to that.

And so you as a consumer care a lot more about, okay, what value am I getting for doing this?

I don’t think many people, you might spend 300 bucks at your coffee shop in a month.

Maybe I do.

But I would never add $300.

You’d have to give me a lot to do that because I don’t want to know that’s how much I spend, and they probably don’t want me to know that’s how much I spend.

There’s that middle ground.

I think for things that are more that everyday spend that we would’ve used cash and coins for in the last 20 years, those are where you actually might not have to do much to get a consumer to do it.

We’re all used to adding money to bus cards, right?

And things like that.

And so I think especially for the use case there, they can also help you on an education side.

They can say, you know, the safe amount is X amount.

If it’s a mom-and-pop laundromat, they can appeal to that aspect of support local.

I think it’s interesting.

Did you have plans to move or you just thought maybe I won’t do laundry in my building?

Okay.

I feel like one where you could really, you would spend the money on laundry?

Well, I’m always like, is it that good?

I think the machine’s a little old.

But just to reveal a little bit of my personality, I had lived in New York for like eight years and I remember thinking, do I really need to own a sofa or a real bed?

Because I was sleeping on a futon.

To be fair to myself, it was folded up because that’s all my room could accommodate.

But I think I’ve always had this mentality, maybe I have to be on the go.

I mean, I’ve lived in the same building for nearly a decade.

So this is like a clear disconnect.

Yeah.

Maybe if you load up the wallet they give you free drying a day a month, or free soap or something.

Yeah.

There are different ways that they could incentivize there for sure.

Well, yeah.

But to your point, there shouldn’t have been the hesitation on my part.

I think that gets to the other point that we end up talking about a lot, is that for a lot of use cases and brands, your wallet is not for 100% of your customers.

It probably is for the person that lives in your building that does laundry.

But it’s for, think about it as your 20% best customers.

We’re really a superpower tool for that.

Your 20% most regular customers are a majority of your revenue.

And so that’s what we are trying to help brands hold on to, squeeze more from, drive better engagement, better affinity, true loyalty, or what we call loyalty with a little L.

And that’s what it’s focused on.

So the coffee shop I go to once a year near my grandma’s house, I’m not their target one.

The one next to my office that I go to twice a day, that’s prime time for me.

And I’m that kind of customer for them.

Yeah.

And I know, I wish I had maybe the recent stat on this, but I’ve always heard industry people say the Starbucks app is like the biggest bank account in the States or whatever.

Or I hear something like that.

I don’t know, is that still the point?

If it was a neobank, it’d be one of the largest neobanks.

Yeah, totally.

Yeah.

So I think it speaks to the opportunity that there is for a lot of brands to emulate that.

And it’s not a bank, right?

Right.

Those liabilities on their balance sheet, it’s cash that they might have access to, but they at the end of the day have to provide goods and services to those customers.

So it’s not revenue yet.

There’s a whole nitty-gritty accounting side of what we work on here at Ansa.

But I think it speaks to the, if you can find ways to capture a little bit more value from your customers by providing more value.

And I think this gets back to girl math doesn’t feel like being bamboozled.

It feels like a fair trade of value.

And so if you can hit that right, really magical things in this flywheel of revenue, loyalty, LTV, cash flow can happen.

Sophia, I wanted to make sure to open it up to payments more broadly since you self-describe as a payments nerd.

Anything on the regulatory front or a product that’s caught your eye or just something you think is super fascinating right now?

One or two things that you’re like, yeah, I’m zoomed in here.

Yeah.

I think a lot’s going on on the regulatory front and payments right now.

I think the Credit Card Competition Act is very interesting to me.

I think it’ll be curious how that impacts the credit card rewards landscape if the economics of a lot of these cards maybe starts to change.

I think there’s a lot of nitty-gritty on that that remains to be seen.

So in short, basically that’s trying to basically be Durbin for credit, is a way to think about it.

Debit cards in the U.S. have to be multibranded.

So if you go to the ATM and you see all those tiny little logos, those are kind of the PINless debit networks in the U.S., like NYCE, Pulse, Accel.

Shazam is the best name for a network, I think, ever.

I forgot about that name.

That is a why.

It’s a great one.

It makes me want to know the song playing though.

Right.

Whenever I get to be like, and Shazam.

Which they probably, hopefully, like the shout-out.

It’s driving toward a similar dual-routing, merchant-choice aspect in credit cards as well.

I think that’s something I am interested in.

I think the other thing I am keeping an eye on, and we’ve also been talking about for years, is what does the future of consumer account-to-account payments look like?

Will that just be for our rent payments and utilities, which would still be huge?

Will that get into everyday purchases?

What does that need to look like?

I think that’s something that is on the edges of what we work on.

But I think from looking at other countries, especially with the global focus of my previous roles and the book I wrote, that’s working really well in other countries.

What will that evolve like and start to look like here in the U.S.?

Yeah.

That’s going to be fun to watch and interesting, I would say.

Duh.

And that’s mildly putting it.

Well, I have one last question for you.

But before I ask that, I wanted to make sure, how should someone find you if they want to find you?

And is there any other comments you want to make while we’re still chatting here on the show?

So if you want to find me on Twitter, I’m @sophgoldb, B as in boy.

You can also follow me on LinkedIn.

But especially if you want to learn more about payments, you should pick up a copy of The Field Guide to Global Payments.

It really is, I think, a great way, and many other people agree and have read it on Amazon, on Goodreads, to dive into payments.

And then if you want to learn more about closed loop and what we’re building at Ansa, it’s Ansa.dev, and we’d love to share more.

Yeah, wonderful.

And I will say something about your book that I am sure other people zoomed in on this too.

The first online commerce transaction was a Pizza Hut.

Which I was like, yeah, yum.

Exactly.

Give it up for the pizza.

Okay, Sophia.

Last question.

What’s the image on your phone’s lock screen?

Is it your dog by chance?

It’s not my dog.

I just decided to take a guess.

Guess again.

We’ll get it.

Oh, I don’t know.

I don’t know.

It’s some really beautiful aspens with the colors changing in Telluride, Colorado.

Oh, that’s pretty.

Yeah.

It’s just nice and stress-free until I open my phone.

Then you see all the alerts and you’re like, these two things disconnect.

Yeah.

So it’s the nice calm before the storm for my phone.

The calm before the storm.

I like that.

Well, Sophia, thanks so much for being on Money Isn’t Everything today.

I really appreciate you on the show.

Huge.

Thank you for having me, Mary.

Really great to be here.

Okay.

The biggest thing I learned today is that money trends, well, they can be fun.

And that the first online transaction involved pizza.

Well, very likely it did.

If you like today’s episode, and I really hope you did, please subscribe.

I don’t want you to miss the next episode.

Two Thursdays from now, you’re in for a treat.

I spoke with Michael Broughton, the CEO and founder of Altro, the fintech startup.

He’s working to help consumers build up their credit scores.

Picture this: building the startup at a hacker house where you’re basically working on mattresses, and that’s when you go viral by being viewed as the Jay-Z at USC.

That’s him.

See you then.