The Role of Convenience and Risk in Consumers' Means of Payment

Carlos Alberto Arango and Varya Taylor

Discussion Papers from Bank of Canada

Abstract: Using data from a 2004 survey of the Canadian public, the authors study the role of convenience and risk in consumers' use of cash relative to debit and credit cards. The authors find that consumers who perceive debit cards and credit cards to be more convenient and less risky than cash use them more frequently. Even at low levels of perceived risk, consumers shift substantially away from cash and towards alternative payment methods. However, the authors' results reveal that there exists a lower bound for which cards can substitute for cash. Also, as other studies have shown, the relative use of cash is higher among older, less-educated, lower-income consumers.

Keywords: Bank; notes (search for similar items in EconPapers)
JEL-codes: E41 L2 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (11)

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