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

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.

[1]  Sheri M Markose,et al.  Network Effects On Cash‐Card Substitution In Transactions And Low Interest Rate Regimes* , 2003 .

[2]  Scott D. Schuh,et al.  Why are (Some) Consumers (Finally) Writing Fewer Checks?: The Role of Payment Characteristics , 2009 .

[3]  Sheri M Markose,et al.  NETWORK EFFECTS ON CASH-CARD SUBSTITUTION , 2003 .

[4]  William C. Whitesell.  The Demand for Currency versus Debitable Accounts: A Note , 1989 .

[5]  N. Jonker.  Payment Instruments as Perceived by Consumers - a Public Survey , 2005 .

[6]  Andrew T. Ching,et al.  Payment Card Rewards Programs and Consumer Payment Choice , 2008 .

[7]  W. Bolt,et al.  Consumer Choice and Merchant Acceptance of Payment Media , 2008 .

[8]  Oz Shy,et al.  The Market for Electronic Cash Cards , 2002 .

[9]  Paper or Plastic? The Effect of Time on the Use of Check and Debit Cards at Grocery Stores , 2006 .

[10]  Carlos A. Arango,et al.  Merchant Acceptance, Costs, and Perceptions of Retail Payments: A Canadian Survey , 2008 .

[11]  M. Weale,et al.  Consumption and the Means of Payment: An Empirical Analysis for the United Kingdom , 2001 .

[12]  William Roberds,et al.  WORKING PAPER SERIESFEDERAL RESERVE BANK of ATLANTA WORKING PAPER SERIES Money Is Privacy , 2004 .

[13]  Ron Borzekowski,et al.  Consumers' Use of Debit Cards: Patterns, Preferences, and Price Response , 2006 .

[14]  Christopher M. Snyder,et al.  Consumer Homing on Payment Cards: From Theory to Measurement , 2008 .

[15]  W. Bolt,et al.  The Effect of Transaction Pricing on the Adoption of Electronic Payments: A Cross-Country Comparison. , 2005 .

[16]  Ron Borzekowski,et al.  The Choice at the Checkout: Quantifying Demand Across Payment Instruments , 2006 .

[17]  David Bounie,et al.  Cash, Check or Bank Card? The Effects of Transaction Characteristics on the Use of Payment Instruments , 2006 .

[18]  V. Taylor.  Trends in Retail Payments and Insights from Public Survey Results , 2006 .