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Cashless Stores and Cash Users

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  • Oz Shy

Abstract

The emergence of cashless stores has led several cities and states to ban such stores. This article investigates this issue by characterizing consumers who pay cash for in-person purchases and consumers who do not have credit or debit cards. Using a random utility model, I estimate 1.3 to 30.9 percentage drop in average per-payment consumer surplus if all stores were to become cashless and when utility is measured by the cost of making a payment, security, and convenience. The conclusion provides a discussion of alternatives to cash for in-person purchases that may be needed before all brick-and-mortar stores become cashless.

Suggested Citation

  • Oz Shy, 2019. "Cashless Stores and Cash Users," FRB Atlanta Working Paper 2019-11, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:2019-11
    DOI: 10.29338/wp2019-11a
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    References listed on IDEAS

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    Cited by:

    1. Agur, Itai & Ari, Anil & Dell’Ariccia, Giovanni, 2022. "Designing central bank digital currencies," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 62-79.
    2. Greene, Claire & Prescott, Brian & Shy, Oz, 2022. "How people pay each other: Data, theory, and calibrations," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).
    3. Shy, Oz, 2020. "How currency denomination and the ATM affect the way we pay," Journal of Economics and Business, Elsevier, vol. 111(C).
    4. Ruth Cohen & Oz Shy & Joanna Stavins, 2022. "Payments Evolution from Paper to Electronic Payments by Merchant Type," Working Papers 22-6, Federal Reserve Bank of Boston.

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    More about this item

    Keywords

    cashless stores; banning cashless stores; consumer payment choice; in-person purchases; alternatives to cash; random utility;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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