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Multihoming in the Market for Payment Media: Evidence from Young Finnish Consumers

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  • Hyytinen, Ari
  • Takalo, Tuomas

Abstract

In the market for payment media, some consumers use only one medium when paying for their point-of-sale transactions, while others multihome and use many. As this pattern reflects the diffusion of new payment media, we take a look at the determinants of the adoption of new payment media through the window of multihoming. Using data on young Finnish consumers, we find that one key determinant of multihoming behaviour is consumer awareness. Our instrumental variable estimates indicate that the better informed use 1.2–1.3 times more payment media than the less informed. Because many payment method innovations are typically first used simultaneously with established methods, our results suggest that increasing consumer awareness could significantly speed up the adoption of new means of payment, such electronic money and mobile payments.

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Bibliographic Info

Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 893.

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Length: 40 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:rif:dpaper:893

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Cited by:
  1. Leitemo, Kai & Söderström, Ulf, 2004. "Robust Monetary Policy in the New-Keynesian Framework," CEPR Discussion Papers 4805, C.E.P.R. Discussion Papers.
  2. 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.
  3. Shy, Oz, 2013. "How many cards do you use?," Working Papers 13-13, Federal Reserve Bank of Boston.
  4. Marc Rysman, 2006. "An Empirical Analysis of Payment Card Usage," Boston University - Department of Economics - Working Papers Series WP2006-002, Boston University - Department of Economics.
  5. Nicole Jonker & Thijs Kettenis, 2007. "Explaining cash usage in the Netherlands: the effect of electronic payment instruments," DNB Working Papers 136, Netherlands Central Bank, Research Department.
  6. Von Kalckreuth, Ulf & Schmidt, Tobias & Stix, Helmut, 2009. "Choosing and using payment instruments: evidence from German microdata," Working Paper Series 1144, European Central Bank.
  7. Elizabeth Klee, 2006. "Families' use of payment instruments during a decade of change in the U.S. payment system," Finance and Economics Discussion Series 2006-01, Board of Governors of the Federal Reserve System (U.S.).
  8. Mikko Puhakka, 2005. "Equilibrium dynamics under lump-sum taxation in an exchange economy with skewed endowments," Macroeconomics 0508033, EconWPA.
  9. Antti Suvanto & Juhana Hukkinen, 2005. "Stable price level and changing prices," Macroeconomics 0508034, EconWPA.
  10. Nicole Jonker, 2007. "Payment Instruments as Perceived by Consumers – Results from a Household Survey," De Economist, Springer, vol. 155(3), pages 271-303, September.
  11. Wilko Bolt & Nicole Jonker & Corry van Renselaar, 2008. "Incentives at the counter: An empirical analysis of surcharging card payment and payment behaviour in the Netherlands," DNB Working Papers 196, Netherlands Central Bank, Research Department.
  12. Nicole Jonker, 2005. "Payment Instruments as Perceived by Consumers - a Public Survey," DNB Working Papers 053, Netherlands Central Bank, Research Department.

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