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The impact of contactless payment on cash usage at an early stage of diffusion

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  • Tobias Trütsch

    (University of St. Gallen, Holzstrasse 15)

Abstract

This paper explores the impact of contactless payment on consumers’ demand for cash at an early stage of diffusion. The specific devices that are investigated are debit and credit cards, in which the feature is embedded. A novel balanced panel dataset drawn from representative surveys on consumer payment behavior in the USA from 2009 to 2013 is analyzed to account for unobserved heterogeneity in cash usage. The results show that contactless credit and debit cards exert no statistically significant effect on cash usage after controlling for unobserved heterogeneity. Consumers’ decision to use contactless payment is an endogenous choice. Card-affined individuals replace conventional card payments with contactless card payments. Hence, the overall effect on cash usage remains unaffected.

Suggested Citation

  • Tobias Trütsch, 2020. "The impact of contactless payment on cash usage at an early stage of diffusion," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 156(1), pages 1-35, December.
    • Handle: RePEc:spr:sjecst:v:156:y:2020:i:1:d:10.1186_s41937-020-00050-0
    DOI: 10.1186/s41937-020-00050-0
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    References listed on IDEAS

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    Cited by:

    1. Marie-Hélène Felt, 2020. "Losing Contact: The Impact of Contactless Payments on Cash Usage," Staff Working Papers 20-56, Bank of Canada.

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    More about this item

    Keywords

    Contactless payment; Money demand; Cash usage; Credit cards; Debit cards;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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