How do we choose to pay using evolving retail payment technologies? Some additional results from Japan

Using Japanese individual household datasets, we obtain the following results that are consistent with findings in most advanced economies. For our first set of findings, persons using electronic money (contactless prepaid cards available in Japan after 2001) for day-to-day transaction values of less than 5,000 yen have lower cash holdings than cash users. Second, the average cash holdings of credit card users for both day-to-day and regular payments are less than that of cash users for day-to-day payments not using credit cards for regular payments. Our second set of findings contributes to the related literature in at least two respects. First, we combine the choice of payment methods for both day-to-day and regular payments. Second, we pay due attention to institutional details about the use of credit cards in Japan and propose unique identifying assumptions excluding those persons using credit cards for day-to-day transactions but not regular payments, and those using cash for day-to-day transactions but credit cards for regular payments.