Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94095
Authors: 
Wakamori, Naoki
Welte, Angelika
Year of Publication: 
2013
Series/Report no.: 
SFB/TR 15 Discussion Paper 431
Abstract: 
Recent studies find that cash remains a dominant payment choice for small-value transactions despite the prevalence of alternative methods of payment such as debit and credit cards. For policy makers an important 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 unobserved heterogeneity (demandside factors) while controlling for merchants' acceptance of cards (supply-side factors). Based on a policy simulation where we impose universal card acceptance among merchants, we find that overall cash usage would decrease by only 7.7 percentage points, implying that cash usage in small-value transactions is driven mainly by consumers' preferences.
Subjects: 
Money demand
Payment methods
Consumer financial behavior
JEL: 
G2
D1
C2
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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