Mobility restrictions and payment choices: The case of the Covid-19 pandemic

Abstract

This paper examines the impact of the Covid-19 mobility restrictions on the payment choices at brick-and-mortar establishments. The asymmetries in the implementation of the Covid-19 mobility restrictions across the Spanish provinces serves as a quasi-natural experiment. The findings show that the severity of the mobility restrictions had an impact on payment choices. Individuals in areas with more stringent restrictions were less likely to use cash. The effect of the mobility restrictions on cash usage was larger among those with lower financial education. However, the severity of the mobility restrictions did not significantly affect the adoption of the most sophisticated digital payment methods like digital wallets. Consumer concerns about Covid-19 transmission through cash did not drive these results. Using a recent survey conducted in a post-pandemic context, where mobility restrictions have been lifted, the impact of mobility restrictions on cash usage has persisted. The main results hold after several robustness tests.