Access, acceptance and use of payment instruments in Colombia

Individual decisions about whether or not to use the payment instruments offered by credit entities depends on their access cost. Their use, however, is inevitably determined by the administrative costs of each instrument, people’s preferences and merchants’ level of acceptance. The use of credit cards, cheques and orders for electronic funds transfers is more common in developed countries than in emerging countries such as Colombia, where less than half the population have access to these alternative forms of payment. In the case of this country, the fundamental predictors of the consumers’ preferences with respect to payment are people’s education and income. Meanwhile, accepting such instruments depends on the sales volume of the business and the degree of formality with which the business has been established. Thus, the propensity to use payment instruments other than cash is greater among people with high and medium levels of education and income, whereas its acceptance is more common in commercial establishments that are large and have a high sales volume.