How Do Debit Cards Affect Cash Demand? Survey Data Evidence
AbstractThis paper analyzes how EFT-POS payments and ATM withdrawals affect purse cash demand. In particular, survey data about Austrian individuals are employed to estimate a cash demand equation which takes account of sample selection effects. The results reveal that purse cash demand is significantly affected by debit card usage and that there are significant differences in cash demand for individuals with different debit card usage frequencies. For example, the point estimates imply that individuals who pay frequently with their debit card hold about 20% less purse cash than all others while frequent ATM withdrawals are associated with about 18% less purse cash demand. Due to the relative small share of frequent users, currently, aggregate purse cash demand is not very strongly affected by EFT-POS payments. However, if usage behavior shifts towards higher usage frequencies, then the findings of this study suggest that purse cash demand will decrease substantially. JEL classification: E41, E58, D12
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Oesterreichische Nationalbank (Austrian Central Bank) in its series Working Papers with number 82.
Length: 43 pages
Date of creation: 07 Jul 2003
Date of revision:
Postal: Oesterreichische Nationalbank, Economic Studies Division, c/o Beate Hofbauer-Berlakovich, POB 61, A-1011 Vienna, Austria
Other versions of this item:
- Helmut Stix, 2004. "How Do Debit Cards Affect Cash Demand? Survey Data Evidence," Empirica, Springer, vol. 31(2), pages 93-115, June.
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Attanasio, Orazio & Guiso, Luigi & Jappelli, Tullio, 1998.
"The Demand for Money, Financial Innovation and the Welfare Cost of Inflation: An Analysis with Households' Data,"
CEPR Discussion Papers
1927, C.E.P.R. Discussion Papers.
- Orazio P. Attanasio & Luigi Guiso & Tullio Jappelli, 2002. "The Demand for Money, Financial Innovation, and the Welfare Cost of Inflation: An Analysis with Household Data," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 317-351, April.
- Orazio Attanasio & Luigi Guiso & Tuillo Jappelli, 1998. "The Demand for Money, Financial Innovation, and the Welfare Cost of Inflation: An Analysis with Household Data," NBER Working Papers 6593, National Bureau of Economic Research, Inc.
- Attanasio, OP & Guiso, L & Jappelli, T, 2002. "The Demand for Money, Financial Innovation and the Welfare Cost of Inflation: an Analysis with Households' Data," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- Attanasio, O.P. & Guiso, L. & Jappelli, T., 2002. "The demand for money, financial innovation, and the welfare cost of inflation: an analysis with household data," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- Orazio Attanasio & Luigi Guiso & Tullio Jappelli, 1998. "The Demand for Money, Financial Innovation, and the Welfare Cost of Inflation: An Analysis with Households' Data," CSEF Working Papers 03, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Sheri M. Markose & Yiing Jia Loke, 2000.
"Network effects on Cash-Card Substitution in Transactions and Low Interest Rate Regimes,"
Economics Discussion Papers
507, University of Essex, Department of Economics.
- Sheri M. Markose & Yiing Jia Loke, 2003. "Network Effects On Cash-Card Substitution In Transactions And Low Interest Rate Regimes," Economic Journal, Royal Economic Society, vol. 113(487), pages 456-476, 04.
- Laura Rinaldi, . "Payment Cards and Money Demand in Belgium," International Economics Working Papers Series ces0116, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, International Economics.
- John V. Duca & William C. Whitesell, 1991.
"Credit cards and money demand: a cross-sectional study,"
9112, Federal Reserve Bank of Dallas.
- Duca, John V & Whitesell, William C, 1995. "Credit Cards and Money Demand: A Cross-sectional Study," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 604-23, May.
- Mathias Drehmann & Charles Goodhart & Malte Krueger, 2002. "The challenges facing currency usage: will the traditional transaction medium be able to resist competition from the new technologies?," Economic Policy, CEPR & CES & MSH, vol. 17(34), pages 193-228, 04.
- Brian M. Doyle, 2000. ""Here, dollars, dollars ..."estimating currency demand and worldwide currency substitution," International Finance Discussion Papers 657, Board of Governors of the Federal Reserve System (U.S.).
- Jussi Snellman & Jukka Vesala & David Humphrey, 2001. "Substitution of Noncash Payment Instruments for Cash in Europe," Journal of Financial Services Research, Springer, vol. 19(2), pages 131-145, April.
- Martikainen, Emmi & Schmiedel, Heiko & Takalo, Tuomas, 2013. "Convergence in European retail payments," Occasional Paper Series 147, European Central Bank.
- Bar-Ilan, Avner & Marion, Nancy, . "Demand for Cash with Intra-Period Endogenous Consumption," Working Papers WP2010/4, University of Haifa, Department of Economics, revised 01 Sep 2010.
- Wilko Bolt & Sujit Chakravorti, 2010. "Digitization of Retail Payment," DNB Working Papers 270, Netherlands Central Bank, Research Department.
- Helmut Stix, 2004. "The Impact of ATM Transactions and Cashless Payments on Cash Demand in Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 90-105, May.
- Cronin, David & McGuinness, Anne, 2010. "Retail Payment Practices. How They Have Evolved in Recent Times and Where They Might Be Going," Quarterly Bulletin Articles, Central Bank of Ireland, pages 56-82, April.
- Hiroshi Fujiki & Migiwa Tanaka, 2009. "Demand for Currency, New Technology and the Adoption of Electronic Money: Evidence Using Individual Household Data," IMES Discussion Paper Series 09-E-27, Institute for Monetary and Economic Studies, Bank of Japan.
- Lee, Chien Chiang & Chang, Chun Ping, 2012. "The Demand for Money in China: A Reassessment Using the Bounds Testing Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 74-94, March.
- Hyytinen, Ari & Takalo, Tuomas, 2004.
"Multihoming in the Market for Payment Media: Evidence from Young Finnish Consumers,"
893, The Research Institute of the Finnish Economy.
- Hyytinen, Ari & Takalo , Tuomas, 2004. "Multihoming in the market for payment media: evidence from young Finnish consumers," Research Discussion Papers 25/2004, Bank of Finland.
- Francisco J. Callado-Mu�oz & Jana Hromcov� & Natalia Utrero-Gonz�lez, 2012.
"Transformation of payment systems: the case of European Union enlargement,"
Applied Economics Letters,
Taylor and Francis Journals, vol. 19(18), pages 1787-1791, December.
- Francisco José Callado Muñoz & Jana Hromcová & Natalia Utrero González, 2011. "Transformation of payment systems: The case of European Union enlargement," Working Papers. Serie AD 2011-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Hyytinen Ari & Takalo Tuomas, 2009.
"Consumer Awareness and the Use of Payment Media: Evidence from Young Finnish Consumers,"
Review of Network Economics,
De Gruyter, vol. 8(2), pages 1-25, June.
- 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.
- Francesco Lippi & Alessandro Secchi, 2008.
"Technological change and the households' demand for currency,"
EIEF Working Papers Series
0801, Einaudi Institute for Economics and Finance (EIEF), revised Oct 2008.
- Lippi, Francesco & Secchi, Alessandro, 2009. "Technological change and the households' demand for currency," Journal of Monetary Economics, Elsevier, vol. 56(2), pages 222-230, March.
- von Kalckreuth, Ulf & Schmidt, Tobias & Stix, Helmut, 2011.
"Using cash to monitor liquidity: Implications for payments, currency demand and withdrawal behavior,"
Discussion Paper Series 1: Economic Studies
2011,22, Deutsche Bundesbank, Research Centre.
- Von Kalckreuth, Ulf & Schmidt, Tobias & Stix, Helmut, 2011. "Using cash to monitor liquidity - implications for payments, currency demand and withdrawal behavior," Working Paper Series 1385, European Central Bank.
- Ben Fung & Kim Huynh & Leonard Sabetti, 2012. "The Impact of Retail Payment Innovations on Cash Usage," Working Papers 12-14, Bank of Canada.
- Guerino Ardizzi & Eleonora Iachini, 2013. "Why are payment habits so heterogeneous across and within countries? Evidence from European countries and Italian regions," Questioni di Economia e Finanza (Occasional Papers) 144, Bank of Italy, Economic Research and International Relations Area.
- Ardizzi, Guerino, 2013. "Card versus cash: empirical evidence of the impact of payment card interchange fees on end users’ choice of payment methods," MPRA Paper 48088, University Library of Munich, Germany, revised 25 May 2013.
- Humphrey, David B., 2010. "Retail payments: New contributions, empirical results, and unanswered questions," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1729-1737, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Markus Knell and Helmut Stix).
If references are entirely missing, you can add them using this form.