Abstract
The current variety of payment methods offers faster settlements and reasonable security, however payment innovations may be met with inertia or resistance. This study addresses the characteristics which may be associated with the adoption of novel payment systems and salient user trends in this respect. We investigate whether the reliance on traditional payment methods across European countries is related to socio-economic aspects, and also delve into the payment habits at the individual level. Results from an econometric model suggest that financial market development and education-related factors are negatively related to the use of traditional payment instruments. When considering consumer payment habits and awareness about novel facilities, particular differences across generations emerged. Cash and debit cards are most widely used and it seems that such choices are related to perceived convenience rather than due to aversion towards novel systems.
Highlights
Throughout the last decades, retail and wholesale payments were revolutionised by a stream of novel systems, which proved relevant in settling new types of business such as online transactions (Dahlberg et al, 2008; Humphrey, 2004; Khan et al, 2017)
We present the results of an econometric model where a quantitative indicator of the reliance on traditional payment instruments was regressed over a set of socio-economic characteristics, using a sample of twenty-eight European countries in order to test for significant relationships. 1
Payment instruments are essential in the settlement of transactions and in this way their efficiency is vital for economies to remain at the forefront of economic development
Summary
Throughout the last decades, retail and wholesale payments were revolutionised by a stream of novel systems, which proved relevant in settling new types of business such as online transactions (Dahlberg et al, 2008; Humphrey, 2004; Khan et al, 2017). Particular payment methods were augmented by the availability of new technology such as improved internet connectivity and the diffusion of smartphones. These payment innovations may offer the potential of quicker and reasonably secure methods of settlement, thereby cutting business costs and raising efficiency (Hasan et al, 2012). With the introduction of novel systems such as blockchain, payment instruments may be expected to evolve further, and knowledge about adoption and usage trends remains a research priority due to the implications on the financial industry, settlement costs, and policy-making (Handayani et al, 2020; Zhu and Fu, 2020). A better understanding of the characteristics which may be associated with the adoption of novel payment systems and their cost effectiveness is beneficial to policy-makers, regulators and socio-economic researchers
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