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The Impact of Contactless Payment on Spending

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  • Tobias Trütsch

Abstract

This paper estimates the effect of contactless payment on the spending ratio in terms of transactions for different transaction types at the point-of-sale. The specific devices that are investigated are debit and credit cards, to which the feature is embedded. Data is drawn from a national representative survey on consumer payment behavior in the US in 2010. Using propensity score matching to control for selection, the estimation shows that the contactless feature yields to a significant increase in the spending ratio at the point-of-sale for both payment methods. The average treatment effect on the treated for credit and debit cards is roughly 8 and 10 percent, respectively. These findings indicate that the private industry can highly benefit from the innovation with respect to new revenue streams. This paper contributes to the existing literature in payment economics by analyzing one of the most recent payment products.

Suggested Citation

  • Tobias Trütsch, 2014. "The Impact of Contactless Payment on Spending," International Journal of Economic Sciences, Prague University of Economics and Business, vol. 2014(4), pages 70-98.
    • Handle: RePEc:prg:jnljes:v:2014:y:2014:i:4:id:23:p:70-98
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    References listed on IDEAS

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    Cited by:

    1. Camara,Youssouf, 2021. "Digital Payments and Business Resilience : Evidence in the Time of COVID-19," Policy Research Working Paper Series 9665, The World Bank.
    2. Aysen Bakkaloglu & Yavuz Toraman, 2022. "Examining Individuals’ Attitudes Toward Electronic Money in the Framework of the Technology Acceptance Model," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(2), pages 475-494, July.

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    More about this item

    Keywords

    contactless payment; payment innovation; spending habits; credit and debit cards; near- field communication (NFC); propensity score matching;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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