The convenience of electronic payments and consumer cash demand

Martin Brown, Nicole Hentschel (), Hannes Mettler and Helmut Stix

Journal of Monetary Economics, 2022, vol. 130, issue C, 86-102

Abstract: How does the improved convenience of electronic payments affect consumer payment choice and cash demand? We study the staggered, quasi-random introduction of contactless debit cards by a retail bank. We use account-level data and compare transactions which are eligible for contactless authentication to transactions which are not. We identify a significant convenience effect on debit card use at the intensive margin. The convenience elasticity is strongest among younger clients. Treatment effects increase over time, coinciding with increasing merchant acceptance. The effect on cash demand is economically small and statistically insignificant. We also find no effect on consumer spending.

Keywords: Financial innovation; Cash management; Payment choice; Pre-analysis plan (search for similar items in EconPapers)
JEL-codes: D14 E41 G20 O33 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:130:y:2022:i:c:p:86-102

DOI: 10.1016/j.jmoneco.2022.06.001

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