WHY IS CASH (STILL) SO ENTRENCHED? INSIGHTS FROM CANADIAN SHOPPING DIARIES

Carlos Alberto Arango, Dylan Hogg and Alyssa Lee

Contemporary Economic Policy, 2015, vol. 33, issue 1, 141-158

Abstract: type="main" xml:id="coep12066-abs-0001"> One similarity among many developed economies is the predominance of cash over electronic payments in terms of payment frequency, especially for the low-value transactions that are the bulk of retail payments. We use the Bank of Canada's 2009 Methods-of-Payment Survey, which collected information on consumers' payment choices through shopping diaries, to estimate a simple model of choice between cash and other payment methods. Results suggest that the main reasons cash is still a popular payment instrument in Canada, especially for low-value transactions, are its wide acceptance among merchants compared with other alternatives, speed and ease of use, and low marginal cost when on hand. ( JEL E41, D12, L81)

Date: 2015
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