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Technology Adoption and Consumer Payments: Evidence from Survey Data

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  • Hayashi Fumiko

    ()
    (Payments System Research, Federal Reserve Bank of Kansas City)

  • Klee Elizabeth

    (Division of Reserve Bank Operations and Payment Systems, Board of Governors of the Federal Reserve System)

Abstract

Consumers pay for hundreds of goods and services each year, but across households and across goods, consumers do not choose to pay the same way. This paper posits that payment choices depend in part on consumers' propensity to adopt new technologies and in part on the nature of the transaction. To test this hypothesis, this paper analyzes consumer's payment instrument use at the point of sale and for bill payment. The sample includes consumers surveyed in 2001, who are primarily users of the Internet. The results indicate that consumers who use new technology or computers are more likely to use electronic forms of payment, such as debit cards and electronic bill payments. Particularly, the use of direct deposit is a significant predictor of electronic payment use. Furthermore, the results indicate that payment choice depends on the characteristics of the transaction, such as the transaction value, the physical characteristics of the point of sale, and a bill's frequency and value variability.

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Bibliographic Info

Article provided by De Gruyter in its journal Review of Network Economics.

Volume (Year): 2 (2003)
Issue (Month): 2 (June)
Pages: 1-16

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Handle: RePEc:bpj:rneart:v:2:y:2003:i:2:n:8

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  1. Huffman, Wallace E & Mercier, Stephanie, 1991. "Joint Adoption of Microcomputer Technologies: An Analysis of Farmers' Decisions," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 541-46, August.
  2. Brian Mantel, 2000. "Why do consumers pay bills electronically? an empirical analysis," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 32-48.
  3. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  4. anonymous, 2002. "The future of retail electronic payments systems: industry interviews and analysis," Staff Studies 175, Board of Governors of the Federal Reserve System (U.S.).
  5. Humphrey, David B & Kim, Moshe & Vale, Bent, 2001. "Realizing the Gains from Electronic Payments: Costs, Pricing, and Payment Choice," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 216-34, May.
  6. James J. McAndrews, 1997. "Network issues and payment systems," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 15-25.
  7. Whitesell, William C, 1992. "Deposit Banks and the Market for Payment Media," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(4), pages 483-98, November.
  8. Hausman, J. A. & Abrevaya, Jason & Scott-Morton, F. M., 1998. "Misclassification of the dependent variable in a discrete-response setting," Journal of Econometrics, Elsevier, vol. 87(2), pages 239-269, September.
  9. Fumiko Hayashi & Rick Sullivan & Stuart E. Weiner, 2006. "A guide to the ATM and debit card industry - 2006 update," Monograph, Federal Reserve Bank of Kansas City, number 2006agttaadci2.
  10. Shy, Oz & Tarkka, Juha, 2002. "The Market for Electronic Cash Cards," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 299-314, May.
  11. Geoffrey R. Gerdes & Jack K . Walton II, 2002. "The use of checks and other noncash payment instruments in the United States," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Aug, pages 360-374.
  12. Carow, Kenneth A. & Staten, Michael E., 1999. "Debit, credit, or cash: survey evidence on gasoline purchases," Journal of Economics and Business, Elsevier, vol. 51(5), pages 409-421, September.
  13. repec:reg:rpubli:253 is not listed on IDEAS
  14. Evans, David S., 2002. "The Antitrust Economics of Two-sided Markets," Working paper 253, Regulation2point0.
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