Payment Card Rewards Programs and Consumer Payment Choice

Andrew Ching and Fumiko Hayashi

MPRA Paper from University Library of Munich, Germany

Abstract: We estimate the direct effects of rewards card programs on consumer payment choice for in-store transactions. By using a data set that contains information on consumer perceived attributes of payment methods and consumer perceived acceptance of payment methods by merchants, we control for consumer heterogeneity in preferences and choice sets. We conduct policy experiments to examine the effects of removing rewards from credit and/or debit cards. The results suggest that: (i) only a small percentage of consumers would switch from electronic to paper-based payment methods, (ii) the effect of removing credit card rewards is greater than that of removing debit card rewards, and consequently, (iii) removing rewards on both credit and debit cards would reduce credit card transactions, but increase debit card transactions.

Keywords: Consumer Choice; Payment Methods; Rewards Programs; Interchange fees (search for similar items in EconPapers)
JEL-codes: C35 D12 M31 (search for similar items in EconPapers)
Date: 2008-04-23
New Economics Papers: this item is included in nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/8458/1/MPRA_paper_8458.pdf original version (application/pdf)

Related works:
Journal Article: Payment card rewards programs and consumer payment choice (2010)
Working Paper: Payment card rewards programs and consumer payment choice (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:8458

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().