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The Boston Fed study of consumer behavior and payment choice: a survey of Federal Reserve System employees

Author

Listed:
  • Marques Benton
  • Krista Blair
  • Marianne Crowe
  • Scott Schuh

Abstract

The way people pay for goods and services is changing dramatically, but little data and research on consumer behavior and payment choice are publicly available. This paper describes the results of a survey of payment behavior and attitudes taken by Federal Reserve employees in 2004. Major contributions of the survey are that it asks: 1) why payment choices are made; 2) why individual payment behavior has changed; and 3) why individual-specific payment characteristics matter for payment choice. Although the survey is not statistically representative of U.S. consumers, and thus may not provide accurate estimates of aggregate U.S. payment trends, many results are consistent with data from more representative payment surveys. For example, the data show a trend away from check-writing and toward electronic and emerging payment methods, but the choice of payment method depends on the type of payment, amount of payment, and other complex factors. Also, cost, convenience, and control over timing are the most important characteristics determining respondents' adoption and use of payment methods. We find that payment characteristics vary widely across respondents, partly because of inherent heterogeneity but perhaps also because of measurement error, misperception, or inadequate information (lack of consumer education). Cross-sectional evidence shows that respondents tend to use payment methods in a manner broadly consistent with their reported assessments of the payment characteristics.

Suggested Citation

  • Marques Benton & Krista Blair & Marianne Crowe & Scott Schuh, 2007. "The Boston Fed study of consumer behavior and payment choice: a survey of Federal Reserve System employees," Public Policy Discussion Paper 07-1, Federal Reserve Bank of Boston.
  • Handle: RePEc:fip:fedbpp:07-1
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    File URL: http://www.bostonfed.org/economic/ppdp/2007/ppdp0701.htm
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    References listed on IDEAS

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    2. W. Scott Frame & Lawrence J. White, 2004. "Empirical Studies of Financial Innovation: Lots of Talk, Little Action?," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 116-144, March.
    3. Nicole Jonker, 2005. "Payment Instruments as Perceived by Consumers - a Public Survey," DNB Working Papers 053, Netherlands Central Bank, Research Department.
    4. Stacey L. Schreft, 2005. "How and why do consumers choose their payment methods?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston.
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    6. Geoffrey R. Gerdes & Jack K. Walton, 2002. "The use of checks and other noncash payment instruments in the United States," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Aug, pages 360-374.
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    10. Williamson, Stephen D., 2003. "Payments systems and monetary policy," Journal of Monetary Economics, Elsevier, vol. 50(2), pages 475-495, March.
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    Cited by:

    1. 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.
    2. Ana Lasaosa & Merxe Tudela, 2009. "Riesgos y ganancias de eficiencia de una estructura jerarquizada en pagos de alto valor: método de simulación," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 10-25, Enero-mar.
    3. William T. Gavin, 2009. "Más dinero: entendiendo los recientes cambios en la base monetaria," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 26-33, Enero-mar.

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    Keywords

    Payment systems ; Consumer behavior ; Electronic funds transfers ; Checks;

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