Payment card rewards programs and consumer payment choice

Andrew Ching and Fumiko Hayashi

No PSR WP 06-02, Payments System Research Working Paper from Federal Reserve Bank of Kansas City

Abstract: Card payments have been growing very rapidly. To continue the growth, payment card networks keep adding new merchants and card issuers try to stimulate their existing customers? card usage by providing rewards. This paper seeks to analyze the effects of payment card rewards programs on consumer payment choice, by using consumer survey data. Specifically, we examine whether credit/debit reward receivers use credit/debit cards relatively more often than other consumers, if so how much more often, and which payment methods are replaced by reward card payments. Our results suggest that (i) consumers with credit card rewards use credit cards much more exclusively than those without credit card rewards; (ii) even among those who carry a credit card balance, consumers with credit card rewards use a credit card more often than those without rewards; (iii) among consumers who receive credit card rewards, those who receive credit card rewards as well as debit card rewards tend to use debit cards more often than those who receive credit card rewards only; and (iv) reward card transactions seem to replace not only paper-based transactions but also non-reward card transactions.

Date: 2006
New Economics Papers: this item is included in nep-fmk and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://www.kansascityfed.org/documents/714/rwp-Ching_Hayashi_Paper.pdf Full-text (application/pdf)

Related works:
Journal Article: Payment card rewards programs and consumer payment choice (2010)
Working Paper: Payment Card Rewards Programs and Consumer Payment Choice (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedkpw:psrwp06-02

Ordering information: This working paper can be ordered from
research.library@kc.frb.org

Access Statistics for this paper

More papers in Payments System Research Working Paper from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by Zach Kastens (zachary.kastens@kc.frb.org).