Consumers' use of debit cards: patterns, preferences, and price response

Shaista Ahmed, Ron Borzekowski and Elizabeth K. Kiser
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Elizabeth K. Kiser: https://www.federalreserve.gov/econres/elizabeth-k-kiser.htm

No 2006-16, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Debit card use at the point of sale has grown dramatically in recent years in the U.S., and now exceeds the number of credit card transactions. However, many questions remain regarding patterns of debit card use, consumer preferences when using debit, and how consumers might respond to explicit pricing of card transactions. Using a new nationally representative consumer survey, this paper describes the current use of debit cards by U.S. consumers, including how demographics affect use. In addition, consumers' stated reasons for using debit cards are used to analyze how consumers substitute between debit and other payment instruments. We also examine the relationship between household financial conditions and payment choice. Finally, we use a key variable on bank-imposed transaction fees to analyze price sensitivity of card use, and find a 12 percent decline in overall use in reaction to a mean 1.8 percent fee charged on certain debit card transactions; we believe this represents the first microeconomic evidence in the United States on price sensitivity for a card payment at the point of sale.

Keywords: Consumer behavior; Payment systems; Debit cards (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cba, nep-fmk and nep-mon
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Consumers' Use of Debit Cards: Patterns, Preferences, and Price Response (2008)
Journal Article: Consumers' Use of Debit Cards: Patterns, Preferences, and Price Response (2008)
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