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Consumer Use of Multiple Payment Methods

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  • Oz Shy

    (Federal Reserve Bank of Atlanta)

Abstract

This article investigates the degree to which buyers choose to diversify their use of payment methods for in-person purchases. Some buyers use only one payment instrument. Others combine the use of mostly cash, credit, and debit cards, and a few paper checks and prepaid cards. To each survey respondent, I apply three concentration and inequality measures over the use of payment instruments. Results show that the average and median degree of consumers’ payment concentration only slightly decline with payment volume and exhibit almost no correlation with consumer demographics.

Suggested Citation

  • Oz Shy, 2021. "Consumer Use of Multiple Payment Methods," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 339-355, May.
    • Handle: RePEc:kap:revind:v:58:y:2021:i:3:d:10.1007_s11151-020-09803-w
    DOI: 10.1007/s11151-020-09803-w
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    References listed on IDEAS

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    1. Klee, Elizabeth, 2008. "How people pay: Evidence from grocery store data," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 526-541, April.
    2. Hyytinen, Ari & Takalo, Tuomas, 2004. "Multihoming in the Market for Payment Media: Evidence from Young Finnish Consumers," Discussion Papers 893, The Research Institute of the Finnish Economy.
    3. repec:zbw:bofrdp:2004_025 is not listed on IDEAS
    4. Claire Greene & Joanna Stavins, 2020. "2018 Diary of Consumer Payment Choice," Consumer Payments Research Data Reports 2019-3, Federal Reserve Bank of Atlanta.
    5. Zinman, Jonathan, 2009. "Debit or credit?," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 358-366, February.
    6. Curry, B & George, K D, 1983. "Industrial Concentration: A Survey," Journal of Industrial Economics, Wiley Blackwell, vol. 31(3), pages 203-255, March.
    7. Michael Cohen & Marc Rysman, 2012. "Payment choice with consumer panel data," Working Papers 13, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    8. Christopher Henry & Kim Huynh & Angelika Welte, 2018. "2017 Methods-of-Payment Survey Report," Discussion Papers 18-17, Bank of Canada.
    9. Nicole Jonker & Anneke Kosse, 2009. "The impact of survey design on research outcomes: A case study of seven pilots measuring cash usage in the Netherlands," DNB Working Papers 221, Netherlands Central Bank, Research Department.
    10. Claire Greene & Joanna Stavins, 2018. "The 2016 and 2017 surveys of consumer payment choice: summary results," Research Data Report 18-3, Federal Reserve Bank of Boston.
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    More about this item

    Keywords

    Multiple payment methods; Consumer payment choice; Payment instruments; In-person purchases; Concentration and inequality measures;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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