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Why Do Shoppers Use Cash? Evidence from Shopping Diary Data

Naoki Wakamori and Angelika Welte

Journal of Money, Credit and Banking, 2017, vol. 49, issue 1, 115-169

Abstract: Recent studies find that cash remains the dominant payment choice for small‐value transactions despite the prevalence of alternative payment methods such as debit and credit cards. An important policy question is whether consumers truly prefer using cash or merchants restrict card usage. Using unique shopping diary data, we estimate a payment choice model with individual heterogeneity, controlling for merchants' acceptance of cards. Based on a policy simulation imposing universal card acceptance among merchants, we find that overall cash usage would decrease by only 8.0 percentage points, implying that cash usage in small‐value transactions is driven mainly by consumer preferences.

Date: 2017
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http://hdl.handle.net/10.1111/jmcb.12379

Related works:
Working Paper: Why Do Shoppers Use Cash? Evidence from Shopping Diary Data (2013) Downloads
Working Paper: Why Do Shoppers Use Cash? Evidence from Shopping Diary Data (2012) Downloads
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Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

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