Do Consumers Pay More Using Debit Cards than Cash

Emma Runnemark, Jonas Hedman, Xiao Xiao

    Research output: Contribution to journalJournal articleResearchpeer-review

    8624 Downloads (Pure)

    Abstract

    We conduct an incentivized experiment to study the effect of the payment method on spending. We find that the willingness to pay is higher when subjects pay with debit cards compared to cash. The result is robust to controlling for cash-on-hand constraints, spending type, price familiarity and consumption habits of the products. The evidence thus suggests that different representations of money matters for consumer behavior. Such results further tease out the underlying mechanism of how payment methods influence spending behavior, which poses important implications for both consumers and merchants, as well as designing of digitalized payment in the future.
    Original languageEnglish
    JournalElectronic Commerce Research and Applications
    Volume14
    Issue number5
    Pages (from-to)285–291
    Number of pages7
    ISSN1567-4223
    DOIs
    Publication statusPublished - 2015

    Keywords

    • Payment Methods
    • Debit Cards
    • Cash
    • Willingness-to-pay
    • Experiment

    Cite this