An Experiment on Retail Payments Systems
We study the behavioral underpinnings of adopting cash versus electronic payments in retail transactions. A novel theoretical and experimental framework is developed to primarily assess the impact of sellers’ service fees and buyers’ rewards from using electronic payments. Buyers and sellers face a coordination problem, independently choosing a payment method before trading. In the experiment, sellers readily adopt electronic payments but buyers do not. Eliminating service fees or introducing rewards significantly boosts the adoption of electronic payments. Hence, buyers’ incentives play a pivotal role in the diffusion of electronic payments but monetary incentives cannot fully explain their adoption choices. Findings from this experiment complement empirical findings based on surveys and field data.
|Date of creation:||May 2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +39 051 209 8019 and 2600
Fax: +39 051 209 8040 and 2664
Web page: http://www.dse.unibo.it
More information through EDIRC
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.:
- Vernon L. Smith, 1962.
"An Experimental Study of Competitive Market Behavior,"
Journal of Political Economy,
University of Chicago Press, vol. 70, pages 111.
- Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70, pages 322.
- 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.
- Giovanna Devetag & Andreas Ortmann, 2007.
"When and why? A critical survey on coordination failure in the laboratory,"
Springer, vol. 10(3), pages 331-344, September.
- Giovanna Devetag & Andreas Ortmann, 2006. "When and Why? A Critical Survey on Coordination Failure in the Laboratory," CEEL Working Papers 0605, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
- Giovanna Devetag & Andreas Ortmann, 2006. "When and Why? A Critical Survey on Coordination Failure in the Laboratory," CERGE-EI Working Papers wp302, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
- Charles M. Kahn & James McAndrews & William Roberds, 2004.
"Money is privacy,"
FRB Atlanta Working Paper No.
2004-18, Federal Reserve Bank of Atlanta.
- Jasmina Arifovic & Janet Hua Jiang, 2014. "Do Sunspots Matter? Evidence from an Experimental Study of Bank Runs," Working Papers 14-12, Bank of Canada.
- Camera, Gabriele, 2001. "Dirty money," Journal of Monetary Economics, Elsevier, vol. 47(2), pages 377-415, April.
- Carlos Arango & Dylan Hogg & Alyssa Lee, 2012. "Why Is Cash (Still) So Entrenched? Insights from the Bank of Canada’s 2009 Methods-of-Payment Survey," Discussion Papers 12-2, Bank of Canada.
- 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.
- Kim Huynh & Philipp Schmidt-Dengler & Helmut Stix, 2014.
"The Role of Card Acceptance in the Transaction Demand for Money,"
14-44, Bank of Canada.
- Kim P. Huynh & Philipp Schmidt-Dengler & Helmut Stix, 2014. "The Role of Card Acceptance in the Transaction Demand for Money," Working Papers 196, Oesterreichische Nationalbank (Austrian Central Bank).
- Huynh, Kim P. & Schmidt-Dengler, Philipp & Stix, Helmut, 2014. "The Role of Card Acceptance in the Transaction Demand for Money," CEPR Discussion Papers 10183, C.E.P.R. Discussion Papers.
- Noussair, C.N. & Tucker, S., 2013.
"Experimental Research On Asset Pricing,"
2013-020, Tilburg University, Center for Economic Research.
- 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.
- Arango, Carlos & Huynh, Kim P. & Sabetti, Leonard, 2015. "Consumer payment choice: Merchant card acceptance versus pricing incentives," Journal of Banking & Finance, Elsevier, vol. 55(C), pages 130-141.
- Carlos A. Arango & Dylan Hogg & Alyssa Lee, 2015. "Why Is Cash (Still) So Entrenched? Insights From Canadian Shopping Diaries," Contemporary Economic Policy, Western Economic Association International, vol. 33(1), pages 141-158, 01.
- Humphrey, David B., 2010. "Retail payments: New contributions, empirical results, and unanswered questions," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1729-1737, August.
- 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.
- Carlos Arango & Kim Huynh & Leonard Sabetti, 2011. "How Do You Pay? The Role of Incentives at the Point-of-Sale," Working Papers 11-23, Bank of Canada.
- Klee, Elizabeth, 2008. "How people pay: Evidence from grocery store data," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 526-541, April.
- Freeman, Scott, 1996. "The Payments System, Liquidity, and Rediscounting," American Economic Review, American Economic Association, vol. 86(5), pages 1126-38, December.
- Gautam Gowrisankaran & Joanna Stavins, 2004. "Network Externalities and Technology Adoption: Lessons from Electronic Payments," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 260-276, Summer.
When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:wp942. 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: (Luca Miselli)
If references are entirely missing, you can add them using this form.