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The use of cash and debit cards as payment instruments in Colombia

Author

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  • Constanza Martínez Ventura

    (Banco de la República)

Abstract

This paper studies the impact that the popularisation of debit cards has had on the payment preferences of retail banking clients with deposit accounts in Colombia. To this end, simultaneous equation models are used to analyse the usual payments and retail purchases of non-durable goods that these people execute in person, as a function of macroeconomic variables, the payments infrastructure, and idiosyncratic variables. The results underline the relevance of the short-term interest rate, the payments infrastructure, and the financial transaction tax on the preferences for payment instruments of this population. Particularly, it is observed that the rise in the number of point-of-sale devices has started to represent a threat to the prevalence of cash, but that idiosyncratic factors such as insecurity and informality incentivise its usage.

Suggested Citation

  • Constanza Martínez Ventura, 2019. "The use of cash and debit cards as payment instruments in Colombia," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 90, pages 71-95, Enero - J.
    • Handle: RePEc:lde:journl:y:2019:i:90:p:71-95
    DOI: 10.17533/udea.le.n90a03
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    References listed on IDEAS

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    More about this item

    Keywords

    money demand; debit card; transaction costs;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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