Payment card rewards programs and consumer payment choice
By using a unique data set that contains detailed information about consumer payment choice and consumers' attitudes toward each payment method, we estimate the effects of payment card rewards on consumer choice of payment methods. Our approach allows us to control for consumer heterogeneity. We find the effects of rewards to be statistically significant across five retail types. Our policy experiments suggest that for the sub-population who hold both credit and debit cards, removing rewards would increase their share of paper-based payment methods (i.e., cash and checks), measured in terms of in-store transactions, by no more than 4 percentage points.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- 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.
- Ron Borzekowski & Elizabeth K. Kiser, 2006. "The choice at the checkout: quantifying demand across payment instruments," Finance and Economics Discussion Series 2006-17, Board of Governors of the Federal Reserve System (U.S.).
- Carol C. Bertaut & Michael Haliassos, 2001. "Debt Revolvers for Self Control," University of Cyprus Working Papers in Economics 0208, University of Cyprus Department of Economics.
- David Humphrey & Moshe Kim & Bent Vale, 1998.
"Realizing the gains from electronic payments: costs, pricing, and payment choice,"
586, Federal Reserve Bank of Chicago.
- Humphrey, David B & Kim, Moshe & Vale, Bent, 2001. "Realizing the Gains from Electronic Payments: Costs, Pricing, and Payment Choice," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 216-34, May.
- Simon, John & Smith, Kylie & West, Tim, 2010.
"Price incentives and consumer payment behaviour,"
Journal of Banking & Finance,
Elsevier, vol. 34(8), pages 1759-1772, August.
- Jonathan Zinman, 2005.
"Debit or credit?,"
Conference Series ; [Proceedings],
Federal Reserve Bank of Boston.
- Nitin Mehta & Surendra Rajiv & Kannan Srinivasan, 2003. "Price Uncertainty and Consumer Search: A Structural Model of Consideration Set Formation," Marketing Science, INFORMS, vol. 22(1), pages 58-84, June.
- Carbó Valverde Santiago & Massoud Nadia & Rodríguez-Fernández Francisco & Saunders Anthony & Scholnick Barry, 2007.
"The Economics of Credit Cards, Debit Cards and ATMs: A Survey and Some New Evidence,"
201074, Fundacion BBVA / BBVA Foundation.
- Scholnick, Barry & Massoud, Nadia & Saunders, Anthony & Carbo-Valverde, Santiago & Rodríguez-Fernández, Francisco, 2008. "The economics of credit cards, debit cards and ATMs: A survey and some new evidence," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1468-1483, August.
- Carbó Valverde Santiago & Liñares-Zegarra José Manuel, 2009.
"How Effective Are Rewards Programs in Promoting Payment Card Usage? Empirical Evidence,"
201059, Fundacion BBVA / BBVA Foundation.
- Carbó-Valverde, Santiago & Liñares-Zegarra, José M., 2011. "How effective are rewards programs in promoting payment card usage? Empirical evidence," Journal of Banking & Finance, Elsevier, vol. 35(12), pages 3275-3291.
- Carbó-Valverde, Santiago & Liñares-Zegarra, José M., 2009. "How effective are rewards programs in promoting payment card usage? Empirical evidence," Working Paper Series 1141, European Central Bank.
- Andrew Ching & Tülin Erdem & Michael Keane, 2009.
"The price consideration model of brand choice,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 24(3), pages 393-420, 04.
- repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
- Nicole Jonker, 2005. "Payment Instruments as Perceived by Consumers - a Public Survey," DNB Working Papers 053, Netherlands Central Bank, Research Department.
- Gans Joshua S & King Stephen P, 2003. "The Neutrality of Interchange Fees in Payment Systems," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-18, January.
- Michelle Sovinsky Goeree, 2008. "Limited Information and Advertising in the U.S. Personal Computer Industry," Econometrica, Econometric Society, vol. 76(5), pages 1017-1074, 09.
- Dan Horsky & Sanjog Misra & Paul Nelson, 2006. "Observed and Unobserved Preference Heterogeneity in Brand-Choice Models," Marketing Science, INFORMS, vol. 25(4), pages 322-335, 07-08.
- Fumiko Hayashi & Elizabeth Klee, 2002.
"Technology adoption and consumer payments : evidence from survey data,"
Payments System Research Working Paper
PSR WP 02-01, Federal Reserve Bank of Kansas City.
- Hayashi Fumiko & Klee Elizabeth, 2003. "Technology Adoption and Consumer Payments: Evidence from Survey Data," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-16, June.
- Margaret Carten & Dan Littman & Scott Schuh & Joanna Stavins, 2007. "Consumer behavior and payment choice : 2006 conference summary," Public Policy Discussion Paper 07-4, Federal Reserve Bank of Boston.
- Ching, Andrew T. & Hayashi, Fumiko, 2010.
"Payment card rewards programs and consumer payment choice,"
Journal of Banking & Finance,
Elsevier, vol. 34(8), pages 1773-1787, August.
- 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.
- Ching, Andrew & Hayashi, Fumiko, 2008. "Payment Card Rewards Programs and Consumer Payment Choice," MPRA Paper 8458, University Library of Munich, Germany.
- Terri Bradford, 2008. "Developments in interchange fees in the United States and abroad," Payments System Research Briefing, Federal Reserve Bank of Kansas City, issue Apr.
- Hirschman, Elizabeth C, 1982. "Consumer Payment Systems: The Relationship of Attribute Structure to Preference and Usage," The Journal of Business, University of Chicago Press, vol. 55(4), pages 531-45, October.
- Harris, Katherine M. & Keane, Michael P., 1998. "A model of health plan choice:: Inferring preferences and perceptions from a combination of revealed preference and attitudinal data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 131-157, November.
- 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.).
- Ron Borzekowski & K. Kiser Elizabeth & Ahmed Shaista, 2008. "Consumers' Use of Debit Cards: Patterns, Preferences, and Price Response," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(1), pages 149-172, 02.
- Fumiko Hayashi & Rick Sullivan & Stuart E. Weiner, 2006. "A guide to the ATM and debit card industry - 2006 update," Monograph, Federal Reserve Bank of Kansas City, number 2006agttaadci2.
- Jonathan Zinman, 2004. "Why use debit instead of credit? Consumer choice in a trillion-dollar market," Staff Reports 191, Federal Reserve Bank of New York.
- Brian Mantel, 2000. "Why do consumers pay bills electronically? an empirical analysis," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 32-48.
- Rochet, Jean-Charles & Wright, Julian, 2010.
"Credit card interchange fees,"
Journal of Banking & Finance,
Elsevier, vol. 34(8), pages 1788-1797, August.
- 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.).
- Elizabeth Klee, 2006. "Paper or plastic? the effect of time on the use of check and debit cards at grocery stores," Finance and Economics Discussion Series 2006-02, Board of Governors of the Federal Reserve System (U.S.).
- Garcia-Swartz Daniel D. & Hahn Robert W. & Layne-Farrar Anne, 2006. "The Move Toward a Cashless Society: Calculating the Costs and Benefits," Review of Network Economics, De Gruyter, vol. 5(2), pages 1-30, June.
- Ausubel, Lawrence M, 1991. "The Failure of Competition in the Credit Card Market," American Economic Review, American Economic Association, vol. 81(1), pages 50-81, March.
- Gene Amromin & Carrie Jankowski & Richard D. Porter, 2005. "Transforming payment choices by doubling fees on the Illinois Tollway," Conference Series ; [Proceedings], Federal Reserve Bank of Boston.
- Simon John, 2005. "Payment Systems Are Different: Shouldn't Their Regulation Be Too?," Review of Network Economics, De Gruyter, vol. 4(4), pages 1-20, December.
- Keane, Michael, 2004. "Modeling Health Insurance Choice Using the Heterogeneous Logit Model," MPRA Paper 55203, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:34:y:2010:i:8:p:1773-1787. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.