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The safety of cash and debit cards: a study on the perception and behaviour of Dutch consumers

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  • Anneke Kosse

Abstract

This paper investigates the impact of consumers' safety perception on debit card and cash usage. A conceptual framework of safety perception and payment behaviour is introduced and tested with 2008 consumer survey data. The results demonstrate that consumers' payment preferences for cash and debit cards are strongly affected by how consumers assess the likelihood and seriousness of safety incidents related to cash, debit cards and ATM withdrawals. Risk aversion, personal characteristics and personal experiences all play a significant role. This study underlines the importance of effective safety measures, which minimise the risks inherent in the payment system, and of clear communication towards consumers, so that they may continue to pay efficiently and safely in all circumstances.

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Bibliographic Info

Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 245.

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Date of creation: Apr 2010
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Handle: RePEc:dnb:dnbwpp:245

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Keywords: debit card; cash; fraud; safety; payment behaviour; risk perception; risk aversion;

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References

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  1. Fernando E. Alvarez & Francesco Lippi, 2007. "Financial Innovation and the Transactions Demand for Cash," NBER Working Papers 13416, National Bureau of Economic Research, Inc.
  2. Borzekowski, Ron & Kiser, Elizabeth K., 2008. "The choice at the checkout: Quantifying demand across payment instruments," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 889-902, July.
  3. Schuh, Scott & Stavins, Joanna, 2010. "Why are (some) consumers (finally) writing fewer checks? The role of payment characteristics," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1745-1758, August.
  4. Julia S. Cheney, 2006. "Supply- and demand-side developments influencing growth in the debit market," Payment Cards Center Discussion Paper 06-11, Federal Reserve Bank of Philadelphia.
  5. Andrew Ching & Fumiko Hayashi, 2006. "Payment card rewards programs and consumer payment choice," Payments System Research Working Paper PSR WP 06-02, Federal Reserve Bank of Kansas City.
  6. Nicole Jonker & Anneke Kosse & Lola Hern�ndez, 2012. "Cash usage in the Netherlands: How much, where, when, who and whenever one wants?," DNB Occasional Studies 1002, Netherlands Central Bank, Research Department.
  7. Ron Borzekowski & Elizabeth K. Kiser & Shaista Ahmed, 2006. "Consumers' use of debit cards: patterns, preferences, and price response," Finance and Economics Discussion Series 2006-16, Board of Governors of the Federal Reserve System (U.S.).
  8. Nicole Jonker, 2007. "Payment Instruments as Perceived by Consumers – Results from a Household Survey," De Economist, Springer, vol. 155(3), pages 271-303, September.
  9. Wilko Bolt & Sujit Chakravorti, 2008. "Consumer Choice and Merchant Acceptance of Payment Media," DNB Working Papers 197, Netherlands Central Bank, Research Department.
  10. Kosse, Anneke, 2013. "Do newspaper articles on card fraud affect debit card usage?," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5382-5391.
  11. Klee, Elizabeth, 2008. "How people pay: Evidence from grocery store data," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 526-541, April.
  12. Zinman, Jonathan, 2009. "Debit or credit?," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 358-366, February.
  13. Julian Wright, 2004. "The Determinants of Optimal Interchange Fees in Payment Systems," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 1-26, 03.
  14. Kosse, Anneke & Jansen, David-Jan, 2013. "Choosing how to pay: The influence of foreign backgrounds," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 989-998.
  15. David B. Humphrey & Lawrence B. Pulley & Jukka M. Vesala, 1996. "Cash, paper, and electronic payments: a cross-country analysis," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 914-941.
  16. Hyytinen, Ari & Takalo, Tuomas, 2008. "Consumer awareness and the use of payment media: evidence from young Finnish consumers," Research Discussion Papers 2/2008, Bank of Finland.
  17. Kahn, Charles M. & Roberds, William, 2009. "Why pay? An introduction to payments economics," Journal of Financial Intermediation, Elsevier, vol. 18(1), pages 1-23, January.
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Citations

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Cited by:
  1. Kosse, Anneke, 2013. "Do newspaper articles on card fraud affect debit card usage?," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5382-5391.
  2. Ardizzi, Guerino, 2012. "The Impact of the Microchip on the Card Frauds," MPRA Paper 41435, University Library of Munich, Germany.
  3. Anneke Kosse & David-Jan Jansen, 2011. "Choosing how to pay: the influence of home country habits," DNB Working Papers 328, Netherlands Central Bank, Research Department.
  4. John Bagnall & David Bounie & Kim P. Huynh & Anneke Kosse & Tobias Schmidt & Scott Schuh & Helmut Stix, 2014. "Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data," Working Papers 192, Oesterreichische Nationalbank (Austrian Central Bank).
  5. Wilko Bolt & Sujit Chakravorti, 2010. "Digitization of Retail Payment," DNB Working Papers 270, Netherlands Central Bank, Research Department.
  6. Éva Divéki & Dániel Listár, 2012. "Better safe than sorry: views of the Hungarian public on the security of payment instruments," MNB Bulletin, Magyar Nemzeti Bank (the central bank of Hungary), vol. 7(3), pages 7-27, October.

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