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Merchant steering of consumer payment choice: Evidence from a 2012 diary survey

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  • Stavins, Joanna
  • Shy, Oz

Abstract

This paper seeks to discover whether U.S. merchants are using their recently granted freedom to offer price discounts and other incentives to steer customers to pay with methods that are less costly to merchants. Using evidence of merchant steering based on the 2012 Diary of Consumer Payment Choice (DCPC), we find that only a very small fraction of transactions received a cash or debit card discount, and even fewer were subjected to a credit card surcharge. We attribute this finding in part to the merchants’ fear of alienating consumers, who may not view the steering attempts as an “acceptable norm.” Transactions at gasoline stations were more likely to receive either cash discounts or credit card surcharges than transactions in other sectors. Transactions over $20 were significantly more likely to receive a cash discount.

Suggested Citation

  • Stavins, Joanna & Shy, Oz, 2015. "Merchant steering of consumer payment choice: Evidence from a 2012 diary survey," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 55(C), pages 1-9.
  • Handle: RePEc:eee:soceco:v:55:y:2015:i:c:p:1-9
    DOI: 10.1016/j.socec.2014.12.006
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    Cited by:

    1. Claire Greene & Scott Schuh & Joanna Stavins, 2017. "The 2015 Survey of Consumer Payment Choice: summary results," Research Data Report 17-3, Federal Reserve Bank of Boston.
    2. Laine, Liisa T. & Ma, Ching-to Albert, 2017. "Quality and competition between public and private firms," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 336-353.
    3. Stavins, Joanna, 2018. "Consumer preferences for payment methods: Role of discounts and surcharges," Journal of Banking & Finance, Elsevier, vol. 94(C), pages 35-53.
    4. Jing Jian Xiao & Chunsheng Tao, 2020. "Consumer finance/household finance: the definition and scope," China Finance Review International, Emerald Group Publishing Limited, vol. 11(1), pages 1-25, June.
    5. Naoki Wakamori & Angelika Welte, 2017. "Why Do Shoppers Use Cash? Evidence from Shopping Diary Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(1), pages 115-169, February.
    6. Joanna Stavins & Huijia Wu, 2017. "Payment discounts and surcharges: the role of consumer preferences," Working Papers 17-4, Federal Reserve Bank of Boston.
    7. Joanna Stavins, 2017. "How do consumers make their payment choices?," Research Data Report 17-1, Federal Reserve Bank of Boston.
    8. Kevin Foster & Claire Greene & Joanna Stavins, 2020. "2018 Survey of Consumer Payment Choice," Consumer Payments Research Data Reports 2019-2, Federal Reserve Bank of Atlanta.
    9. Aurazo, Jose & Vega, Milton, 2021. "Why people use digital payments: Evidence from micro data in Peru," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 2(4).
    10. Claire Greene & Joanna Stavins, 2018. "The 2016 and 2017 surveys of consumer payment choice: summary results," Research Data Report 18-3, Federal Reserve Bank of Boston.
    11. Nicole Jonker & Mirjam Plooij & Johan Verburg, 2017. "Did a Public Campaign Influence Debit Card Usage? Evidence from the Netherlands," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(1), pages 89-121, October.
    12. Carlos A. Arango-Arango & Héctor M. Zárate-Solano & Nicolás F. Suárez-Ariza, 2017. "Determinantes del Acceso, Uso y Aceptación de Pagos Electrónicos en Colombia," Borradores de Economia 999, Banco de la Republica de Colombia.

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    More about this item

    Keywords

    Payment choice; Social norms; Merchant behavior; Consumer behavior; Discounting and surcharging;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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