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The Role of Convenience and Risk in Consumers' Means of Payment

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  • Carlos Arango
  • Varya Taylor

Abstract

Using data from a 2004 survey of the Canadian public, the authors study the role of convenience and risk in consumers' use of cash relative to debit and credit cards. The authors find that consumers who perceive debit cards and credit cards to be more convenient and less risky than cash use them more frequently. Even at low levels of perceived risk, consumers shift substantially away from cash and towards alternative payment methods. However, the authors' results reveal that there exists a lower bound for which cards can substitute for cash. Also, as other studies have shown, the relative use of cash is higher among older, less-educated, lower-income consumers.

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File URL: http://www.bankofcanada.ca/en/res/dp/2009/dp09-8.pdf
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Bibliographic Info

Paper provided by Bank of Canada in its series Discussion Papers with number 09-8.

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Length: 27 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:bca:bocadp:09-8

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Web page: http://www.bank-banque-canada.ca/

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Keywords: Bank notes;

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Cited by:
  1. Scott Schuh & Joanna Stavins, 2012. "How consumers pay: adoption and use of payments," Working Papers 12-2, Federal Reserve Bank of Boston.
  2. Anneke Kosse, 2012. "Do newspaper articles on card fraud affect debit card usage?," DNB Working Papers 339, Netherlands Central Bank, Research Department.
  3. Carlos Arango & Kim Huynh & Leonard Sabetti, 2011. "How Do You Pay? The Role of Incentives at the Point-of-Sale," Working Papers 11-23, Bank of Canada.

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