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How currency denomination and the ATM affect the way we pay

Oz Shy

Journal of Economics and Business, 2020, vol. 111, issue C

Abstract: I show how currency denomination and the ATM influence consumers’ choice of whether to pay cash for in-person purchases. I identify transaction values above which consumers switch from paying cash to paying with cards. The sharpest changes in the share of cash payments occur at $20 and $40 which coincide with the observation that most ATMs in the US dispense multiples of $20 bills. Other thresholds prevail at multiples of $5 and $10. The above thresholds generate asymmetries in consumer behavior where the share of cash payments increases for payments values just below the thresholds and decreases just above them.

Keywords: Currency denomination; Automated teller machines; ATM; Cash payments; Consumer payment choice; Payment methods; In-person purchases (search for similar items in EconPapers)
JEL-codes: D9 E42 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:111:y:2020:i:c:s0148619519302942

DOI: 10.1016/j.jeconbus.2020.105908

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