Cash, Check or Bank Card? The Effects of Transaction Characteristics on the Use of Payment Instruments

Abstract

Exploiting a unique and original dataset of 11,945 payments made from March to May 2005, the paper estimates the determinants of the probability of a transaction being paid by cash, check or bank card at the point of sale. Controlling for individual characteristics, the main results of the paper are: 1) a differentiated effect of the transaction size regarding payment instruments; 2) a specialization effect between payment instruments according to the type of good and spending place; 3) a double supply-side effect due to a restriction of the payment choice and to the organization of the payment process. For the first time ever, detailed data on consumption and payment patterns make it possible to assess the role of transaction characteristics in the use of payment instruments.