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Choice of payment instrument for low-value transactions in Japan

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  • Fujiki, Hiroshi
  • Tanaka, Migiwa

Abstract

In this paper, we examine the determinants of the choice of payment instrument for low-value day-to-day transactions. Using Japanese household data from 2007 to 2014, we find that three payment instruments, namely, cash, electronic money, and credit cards, comprise the major payment choices for transactions with values less than 1,000 yen (about 8.7 euros). We also find that high-income, financially sophisticated households in urban areas tend to use both electronic money and cash. Further, family households choosing electronic money and cash do not have higher cash holdings compared with family households exclusively choosing cash, holding all other variables constant. We obtain weak evidence that single-person households choosing electronic money and cash have higher cash holdings compared with single-person households exclusively choosing cash, holding all other variables constant.

Suggested Citation

  • Fujiki, Hiroshi & Tanaka, Migiwa, 2017. "Choice of payment instrument for low-value transactions in Japan," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162909, Deutsche Bundesbank.
    • Handle: RePEc:zbw:iccp17:162909
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    File URL: https://www.econstor.eu/bitstream/10419/162909/1/Fujiki.pdf
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    References listed on IDEAS

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    Cited by:

    1. Chen, Heng & Huynh, Kim P. & Shy, Oz, 2019. "Cash versus card: Payment discontinuities and the burden of holding coins," Journal of Banking & Finance, Elsevier, vol. 99(C), pages 192-201.

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    More about this item

    Keywords

    cash demand; electronic money;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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