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Do Consumers Pay More Using Debit Cards than Cash? An Experiment

Author

Listed:
  • Runnemark, Emma

    (Department of Economics, Lund University)

  • Hedman, Jonas

    (Department of IT Management, Copenhagen Business School)

  • Xiao, Xiao

    (Department of IT Management, Copenhagen Business School)

Abstract

We conduct an incentivized experiment to test whether the willingness to pay is higher for debit cards compared to cash for three consumer products. Our findings support this conjecture also after controlling for cash availability, spending type, price familiarity and consumption habits of the products. The evidence thus suggests that different representations of money matters for consumer behavior.

Suggested Citation

  • Runnemark, Emma & Hedman, Jonas & Xiao, Xiao, 2014. "Do Consumers Pay More Using Debit Cards than Cash? An Experiment," Working Papers 2014:21, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2014_021
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    File URL: http://project.nek.lu.se/publications/workpap/papers/wp14_21.pdf
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    References listed on IDEAS

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    Cited by:

    1. Arvind Agrawal & James W. Gentry, 2020. "Why do many consumers prefer to pay now when they could pay later?," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(2), pages 607-627, June.
    2. Egor Krivosheya & Polina Belyakova, 2019. "Financial innovations role in consumer behavior at Russian retail payments market," Proceedings of Economics and Finance Conferences 9511955, International Institute of Social and Economic Sciences.
    3. Spantig, Lisa, 2021. "Cash in hand and savings decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1206-1220.
    4. Ayushi Bajaj & Nikhil Damodaran, 2020. "Consumer Payment Choice and the Heterogeneous Impact of India’s Demonetization," Monash Economics Working Papers 07-20, Monash University, Department of Economics.
    5. Frank van der Horst & Jelle Miedema & Daniël Schreij & Martijn Meeter, 2017. "Effects of payment instruments on unhealthy purchases," DNB Working Papers 582, Netherlands Central Bank, Research Department.
    6. Eschelbach, Martina, 2017. "Pay cash, buy less trash? – Evidence from German payment diary data," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162908, Deutsche Bundesbank.
    7. Végső, Tamás & Belházyné Illés, Ágnes & Bódi-Schubert, Anikó, 2018. "Cash or Card? – An Explorative Analysis of Consumers’ Payment Behaviour in Hungary," Public Finance Quarterly, Corvinus University of Budapest, vol. 63(4), pages 448-472.
    8. Rufina Gafeeva & Erik Hoelzl & Holger Roschk, 2018. "What else can your payment card do? Multifunctionality of payment modes can reduce payment transparency," Marketing Letters, Springer, vol. 29(1), pages 61-72, March.
    9. Ayushi Bajaj & Nikhil Damodaran, 2021. "Consumer Payment Choice and the Heterogeneous Impact of India’s Demonetization," Monash Economics Working Papers 2021-15, Monash University, Department of Economics.

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    More about this item

    Keywords

    payment methods; debit cards; cash; willingness-to-pay;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D10 - Microeconomics - - Household Behavior - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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