The Impact of Retail Payment Innovations on Cash Usage (Fung B., Huynh K., Sabetti L.)

Central Banks Credit Cards Payment systems

Abstract Many predict that innovations in retail payment may render cash obsolete. We investigate this possibility in the context of recent payment innovations such as contactless-credit and stored-value cards. We apply causal inference methods on the 2009 Bank of Canada Method of Payment survey, a representative sample of adult Canadians’ shopping behaviour for retail consumption over a three-day period. We find that using contactless credit cards and stored-value cards lead to a reduction in average cash usage for transactions both in terms of value and volume. Sensitivity analysis is undertaken and our estimates are robust to hidden bias.
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Libref/ Fung B., Huynh K., Sabetti L. (2012) “The Impact of Retail Payment Innovations on Cash Usage”. Bank of Canada Working Paper 2012-14, pp. 1-31.
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