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An empirical analysis of bill payment choices

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  • Anneke Kosse

Abstract

The aim of this paper is to examine which payment instruments Canadians use for paying bills and to assess the factors driving their bill payment behavior. I use 2019 survey data collected from over 4000 Canadians and estimate a set of binomial and multinomial regressions to assess the factors influencing consumers’ use and perception of different bill payment options. I find that there is no single dominant payment method for all consumer groups. Demographics, financial situation, new technology adoption and point-of-sale payment habits play a significant role in the usage of bill payment methods as well as in consumers’ stated reasons for and barriers to use. Moreover, I demonstrate that consumers’ bill payment behavior strongly varies by bill type. The conclusions are useful for policy makers, authorities and payment service providers intending to stimulate the uptake and use of digital payments and to encourage a migration away from paper-based payment methods. Moreover, the results are helpful for policy discussions on how to accommodate end-user needs when (re)designing retail payment systems.

Suggested Citation

  • Anneke Kosse, . "An empirical analysis of bill payment choices," Journal of Financial Market Infrastructures, Journal of Financial Market Infrastructures.
    • Handle: RePEc:rsk:journ7:7820076
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    References listed on IDEAS

    as
    1. John Bagnall & David Bounie & Kim P. Huynh & Anneke Kosse & Tobias Schmidt & Scott Schuh, 2016. "Consumer Cash Usage: A Cross-Country Comparison with Payment Diary Survey Data," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 1-61, December.
    2. Schuh, Scott & Stavins, Joanna, 2010. "Why are (some) consumers (finally) writing fewer checks? The role of payment characteristics," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1745-1758, August.
    3. D. Bounie & A. Francois, 2011. "The economics of bill payments: an empirical analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 18(10), pages 961-966.
    4. Christopher Henry & Kim Huynh & Angelika Welte, 2018. "2017 Methods-of-Payment Survey Report," Discussion Papers 18-17, Bank of Canada.
    5. Claire Greene & Joanna Stavins, 2020. "Consumer Payment Choice for Bill Payments," Working Papers 20-9, Federal Reserve Bank of Boston.
    6. Arango, Carlos & Huynh, Kim P. & Sabetti, Leonard, 2011. "How do you pay? The role of incentives at the point-of-sale," Working Paper Series 1386, European Central Bank.
    7. Brian Mantel, 2000. "Why do consumers pay bills electronically? an empirical analysis," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 25(Q IV), pages 32-48.
    8. Kosse, Anneke, 2013. "Do newspaper articles on card fraud affect debit card usage?," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5382-5391.
    9. Kosse, Anneke & Jansen, David-Jan, 2013. "Choosing how to pay: The influence of foreign backgrounds," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 989-998.
    10. Carlos Arango & Angelika Welte, 2012. "The Bank of Canada’s 2009 Methods-of-Payment Survey: Methodology and Key Results," Discussion Papers 12-6, Bank of Canada.
    11. 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.
    12. Nicole Jonker, 2007. "Payment Instruments as Perceived by Consumers – Results from a Household Survey," De Economist, Springer, vol. 155(3), pages 271-303, September.
    13. Anneke Kosse & Heng Chen & Marie-Hélène Felt & Valéry Dongmo Jiongo & Kerry Nield & Angelika Welte, 2017. "The Costs of Point-of-Sale Payments in Canada," Discussion Papers 17-4, Bank of Canada.
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    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • G2 - Financial Economics - - Financial Institutions and Services

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