Debit Card Incentives and Consumer Behavior: Evidence Using Natural Experiment Methods

Nicholas Clerkin () and Andrew Hanson
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Nicholas Clerkin: Marquette University

Journal of Financial Services Research, 2021, vol. 60, issue 2, No 1, 135-155

Abstract: Abstract We estimate the effects of a debit card incentive program on consumer behavior using bank-recorded transaction micro data and a natural experiment design. Using geographic and eligibility features of a generous pilot program offered by a Midwestern regional bank, we estimate both difference in difference and regression discontinuity models, allowing us to identify changes in debit and cash usage resulting from the program. Our primary results show that the program increases the number of debit transactions per customer by between 18.8 and 20.4%. We also estimate that cash usage declines, although these estimates are not statistically significant.

Keywords: Payment methods; Debit card; Rewards programs; Natural experiment; G20; M31 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10693-020-00342-9

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