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The Impact of Electronic Payments for Vulnerable Consumers: Evidence from Social Security

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  • Drew M. Anderson
  • Alexander Strand
  • J. Michael Collins

Abstract

Vulnerable consumers may face barriers to using electronic payments, especially consumers in “unbanked†households where no member has an account to receive payments. In March 2013, the US Social Security Administration transitioned exclusively to electronic payments, representing a large shift in payment mode mandated at the federal level. This study identifies the size and characteristics of the population impacted by this shift, by linking administrative data on Social Security payments to a nationally representative survey on the use of bank accounts and financial services. We find that the majority of unbanked Social Security recipients took up electronic payments well before the March 2013 deadline. The mandate does not appear to have increased the use of bank accounts. Instead, recipients used electronic payment cards. However, the transition to electronic payments was slowest among the most financially vulnerable households, suggesting a focus on these households as payment methods continue to develop.

Suggested Citation

  • Drew M. Anderson & Alexander Strand & J. Michael Collins, 2018. "The Impact of Electronic Payments for Vulnerable Consumers: Evidence from Social Security," Journal of Consumer Affairs, Wiley Blackwell, vol. 52(1), pages 35-60, March.
    • Handle: RePEc:bla:jconsa:v:52:y:2018:i:1:p:35-60
    DOI: 10.1111/joca.12140
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    Cited by:

    1. Julia Rötzmeier-Keuper, 2020. "Consumer Vulnerability: Overview And Synthesis Of The Current State Of Knowledge And Future Service-Related Research Directions," Working Papers Dissertations 65, Paderborn University, Faculty of Business Administration and Economics.
    2. Li, Jiayi & Luo, Sumei & Zhou, Guangyou, 2023. "Electronic payment, natural environment and household consumption: Evidence from China household finance survey," International Review of Financial Analysis, Elsevier, vol. 85(C).
    3. Chan‐Hoong Leong & Soo Jiuan Tan & Elizabeth A. Minton & Siok Kuan Tambyah, 2021. "Economic hardship and neighborhood diversity: Influences on consumer well‐being," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(4), pages 1226-1248, December.
    4. P. M. Vik & D. Kamerāde & K. T. Dayson, 2024. "The Link Between Digital Skills and Financial Inclusion—Evidence from Consumers Survey Data from Low-Income Areas," Journal of Consumer Policy, Springer, vol. 47(3), pages 373-393, September.
    5. Rui Zhou, 2022. "Sustainable Economic Development, Digital Payment, and Consumer Demand: Evidence from China," IJERPH, MDPI, vol. 19(14), pages 1-20, July.

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