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Retail Payment Innovations and Cash Usage: Accounting for Attrition Using Refreshment Samples

Heng Chen (), Marie-Helene Felt and Kim Huynh ()

Staff Working Papers from Bank of Canada

Abstract: We exploit the panel dimension of the Canadian Financial Monitor (CFM) data to estimate the impact of retail payment innovations on cash usage. We estimate a semiparametric panel data modelthat accounts for unobserved heterogeneity and allows for general forms of non-random attrition. We use annual data from the CFM on the methods of payment and cash usage for the period 2010–12. Estimates based on cross-sectional methods find a large impact of retail payment on cash usage (around 10 percent). However, after correcting for attrition, we find that contactless credit cards and multiple stored-value cards (reloadable) have no significant impact on cash usage, while single-purpose stored-value cards reduce the usage of cash by 2 percent in terms of volume. These results point to the uneven pace of the diffusion of payment innovations, especially contactless credit.

Keywords: Bank notes; E-Money; Econometric and statistical methods; Financial services (search for similar items in EconPapers)
JEL-codes: C35 E41 (search for similar items in EconPapers)
Pages: 74 pages
Date: 2014
New Economics Papers: this item is included in nep-ban and nep-mac
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Journal Article: Retail payment innovations and cash usage: accounting for attrition by using refreshment samples (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:14-27

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