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Why don't consumers use electronic banking products? towards a theory of obstacles, incentives, and opportunities

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  • Brian Mantel

Abstract

This paper proposes a framework for describing why consumers use electronic banking products such as electronic bill payment, credit cards, debit cards, stored value, and e-cash. The paper surveys the literature; reports on the results of several studies, and develops a framework for evaluating consumer electronic banking usage. The framework includes three primary factors that explain consumer electronic banking usage: (1) household wealth, (2) personal preferences (e.g., convenience, budgeting, control, incentives, involvement, security), and (3) transaction-specific factors (e.g., dollar size, variability of dollar amount, offline versus online location, etc.). A number of ad hoc theories could be created to explain payment instrument successes on a case by case basis. However, the author proposes that this general decision-making framework is a superior tool for management and public policy analysis because of its simplicity, ability to explain a range of outcomes, and ability to develop testable forecasts.

Suggested Citation

  • Brian Mantel, 2000. "Why don't consumers use electronic banking products? towards a theory of obstacles, incentives, and opportunities," Occasional Paper; Emerging Payments EPS-2000-1, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhop:eps-2000-1
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    References listed on IDEAS

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    Cited by:

    1. Zinman, Jonathan, 2009. "Debit or credit?," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 358-366, February.
    2. Jonathan Zinman, 2004. "Why use debit instead of credit? Consumer choice in a trillion-dollar market," Staff Reports 191, Federal Reserve Bank of New York.
    3. Ulf Kalckreuth & Tobias Schmidt & Helmut Stix, 2014. "Choosing and using payment instruments: evidence from German microdata," Empirical Economics, Springer, vol. 46(3), pages 1019-1055, May.
    4. Brian Mantel, 2000. "Why do consumers pay bills electronically? an empirical analysis," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 25(Q IV), pages 32-48.
    5. Stroborn, Karsten & Heitmann, Annika & Leibold, Kay & Frank, Gerda, 2004. "Internet payments in Germany: a classificatory framework and empirical evidence," Journal of Business Research, Elsevier, vol. 57(12), pages 1431-1437, December.
    6. Sujit Chakravorti & Timothy McHugh, 2002. "Why do we use so many checks?," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 26(Q III), pages 44-59.
    7. Jyrkönen, Hanna, 2004. "Less cash on the counter: forecasting Finnish payment preferences," Bank of Finland Research Discussion Papers 27/2004, Bank of Finland.
    8. repec:zbw:bofrdp:2004_027 is not listed on IDEAS
    9. Imaduddin Sahabat & Teguh Dartanto & Haidy A. Passay & Diah Widyawati, 2017. "Electronics Payment Decisions of the Indonesian Urban Households: A Nested Logit Analysis of the Effects of the Payment Characteristics," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 498-511.
    10. Ciccotello, Conrad S. & Wood, Russell E., 2001. "An investigation of the consistency of financial advice offered by web-based sources," Financial Services Review, Elsevier, vol. 10(1-4), pages 5-18.
    11. Jyrkönen, Hanna, 2004. "Less cash on the counter : forecasting Finnish payment preferences," Research Discussion Papers 27/2004, Bank of Finland.
    12. Theodoro D. Cocca, 2002. "Transaktionskostentheoretische Betrachtung des Anlageverhaltens im Online-Handel und deren empirische Evidenz," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(IV), pages 439-464, December.
    13. Brian Mantel & Timothy McHugh, 2001. "Competition and innovation in the consumer e-payments market? considering the demand, supply, and public policy issues," Occasional Paper; Emerging Payments EPS-2001-4, Federal Reserve Bank of Chicago.
    14. Daniela Bojan, 2009. "Card Fraud Evolution Regulation And Prevention Measures," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-61.
    15. Noll, Franklin, 2008. "The Total Value of the $1 Federal Reserve Note: Factoring in Physicality and the Consumer," MPRA Paper 22081, University Library of Munich, Germany.

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