How consumers pay: adoption and use of payments

Scott Schuh and Joanna Stavins

No 12-2, Working Papers from Federal Reserve Bank of Boston

Abstract: Using data from a nationally representative survey on consumer payment behavior, we estimate Heckman two-stage regressions on the adoption and use of seven different payment instruments. We find that the characteristics of payments are important in determining consumer payment behavior, even when controlling for demographic and financial attributes: setup and record keeping are especially important in explaining adoption, while security is important in explaining which methods consumers use for transactions. For the first time, we estimate the number of payment methods adopted by consumers conditional on having access to a bank account, as the unbanked consumers' payment choices are much more limited than those of consumers with bank accounts. This paper follows the analysis in Schuh and Stavins (2010), but with improved data, allowing us to estimate a better model of payment behavior. As in the previous study, cost is found to significantly affect payment use, indicating that the recent increase in the cost of debit cards issued by some banks may lead to a reduction in U.S. consumers' reliance on debit cards for transactions.

Keywords: Payment; systems (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-ban and nep-mkt
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Citations: View citations in EconPapers (7)

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Journal Article: How Consumers Pay: Adoption and Use of Payments (2013)
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