Payment Preferences Research Articles

Preferences for Cash vs. Card Payments: An Analysis using German Household Scanner Data

This paper studies preferences for cash versus card payments using household scanner data of up to 18,000 German households from 2009 to 2015. I exploit a unique institutional setting in which virtually all households have access free-of-charges to the same debit card, the girocard, which has the same liquidity as cash, and which allows to make payments of any denomination at all considered retailers without any additional benefits or costs. Accounting for household fixed effects and thus also unexplained household preferences, the paper shows that cash usage hardly decreases in the aggregate over these seven years. The estimated decline in cash usage over time becomes substantially smaller compared to a model without fixed effects and thus as suggested by earlier studies. Still, I find that, individually, households exhibit great differences in their use of cash vs. card payments but that these differences are also individually persistent over the course of the covered seven years. The particular institutional environment and the long-term panel structure of the data allow me to rule out other common explanations for households’ payment choices.

Stakeholder preferences for payments for ecosystem services (PES) versus other environmental management approaches for mangrove forests

Choosing from a range of environmental management options can be more effective when considering stakeholder preferences. This is particularly true in the coastal tropics, where numerous actors and institutions intersect to shape environmental governance. Here, we investigate stakeholder preferences for an array of options regarding the sustainable development and conservation of mangrove forests. These include: payments for ecosystem services (PES), ecotourism, selling non-timber forest products, bio-charcoal production, and forest restoration financed via corporate social responsibility (CSR). Empirical studies from two socio-ecological settings in Thailand reveal the preferences of government agencies, corporations, municipal and village heads, and several community associations (fishers, senior citizens, housewives, environmentalists, salt-flat workers, oil palm plantation owners). Interviews and participatory multi-criteria decision analysis (MCDA) elicited preferences based on the likelihood of achieving favourable environmental, economic, and social outcomes. Findings reveal (1) PES was favoured – although motivations were not driven solely by the prospect of financial gain, but by the land tenure security, collaborations, and long-term ecological benefits that were perceived to occur as a result; (2) PES for local services (water quality) were preferred over global services (climate change mitigation); (3) criteria related to wellbeing, livelihoods, and environmental stewardship are influenced by broad cultural and political ideologies, rather than site-specific characteristics; and (4) clear tensions both between private and public actors, and between national and local actors. Our study highlights the importance of involving all informed stakeholders in the decision-making process in order to understand the complex reasons driving environmental management preferences, and to gain greater acceptance of biodiversity conservation and natural resource management actions. We also call for greater transparency in MCDA studies by presenting more of the qualitative data used to subjectively construct the quantitative criteria.

Who uses smart card? Understanding public transport payment preference in developing contexts, a case study of Manila's LRT-1

The culture of “tingi-tingi” or sachet economy provides a strong backdrop to better understand the payment mode preference of the riding public in the Philippines. First, the use of single journey tickets (SJT) reflects the purchasing practices amongst the urban poor thereby affecting the promotion and uptake of public transport smart cards. Second, as a glocalization strategy, it can inform what, how, when, and why services that has global uptake can be tailored towards the realities of a differentiated, local market conditions.Categorical principal component analysis (CATPCA) is presented to determine the key variables explaining the likelihood of uptake of smart cards for public transport passengers in the Philippines. The Metro Manila Light Rail Transit Line 1 (LRT-1) presents an appropriate context to examine how the glocalization of smart cards can help improve the quality of public transport services, and to provide planning and policy recommendations on smart card uptake and integrated ticketing, with the end goal of improving public transport provision and management. LRT-1 alongside its change in management, also introduced a new smart card payment system. However, more than half continue to use single journey tickets.The model parameters are estimated using primary survey data collected from LRT-1 passengers. Transit smart card has been widely used around the world and effectively reduces waiting time for passengers who used to purchase paper tickets.The main results of the model reveal that: (1) only groups with high education background, stable income, or with stable job would likely to use smart card; (2) passengers with lower education level, lower income, or with unstable job prefer to use single journey ticket; and (3) the sachet economy is strongly associated with the purchasing practices amongst Filipinos, particularly the urban poor, hence may affect the promotion and uptake of public transit smart cards. These findings may inform changes to the introduction of alternative payment schemes and the planning of public transport policies that recognise the need for an effective glocalization strategy, paving the way towards improved public transport service and provision.

Assessing the Acceptance of the Pay-For-Performance Model in a Segment of California Pharmacists

Background Pay-for-performance (P4P) is a payment system in which providers are rewarded financially for the outcome of patient care. This study surveyed pharmacists to gain an overall understanding of their knowledge, experience, and attitude toward P4P. We investigated if having prior experience with P4P influences one's attitude toward and acceptance of this payment model. Methods A cross-sectional study was performed where a survey was sent to pharmacists affiliated with the University of California, San Diego (UCSD) School of Pharmacy. Data was collected over a two-week period. Chi-square and odds-ratio (OR) tests were used to assess an association between payment preference and the following factors: management experience, experience with P4P, years of practice, and familiarity with P4P. Six benefits and six problems relating to P4P were evaluated. Results Eighty-seven pharmacists participated in our survey. Fifty preferred traditional pay, and thirty-seven preferred P4P. The OR analysis suggests: 1) Pharmacists with P4P experience are 50% more likely to prefer P4P, 2) Pharmacists with management experience are 39% more likely to prefer P4P, and 3) Pharmacists with less than five years of working experience are 12% more likely to prefer P4P. The top perceived benefit of P4P was increased collaboration among healthcare providers. The main perceived challenge was cumbersome billing processes. Conclusion Pharmacists with P4P experience held more positive views of the payment system. Pharmacists without experience in the program were less supportive. The positive responses about P4P from those with P4P experience suggest that employers may receive more support for P4P from their staffs by educating them about the benefits of the model.

Will that be cash or credit? Payment preferences and rising VAT in Argentina

ABSTRACTThis article studies how Argentina’s value-added tax (VAT) revenue has risen to historic highs since its 2001 sovereign default and continues to grow despite unchanged VAT rates, slow economic growth, stagnant household consumption, and low commodity prices after 2010. In 2015, VAT revenue accounted for one-quarter of all tax revenue in Argentina. We show that Argentina’s banked population went from less than 41.6% in 2003 to 89.6% in 2016. Consequently, there was significant growth in electronic payments via credit cards and debit cards. Using time series regression, the authors show that the rising banked population and card growth is correlated with VAT-to-GDP increases from 2002 to 2015. The authors posit that one reason for these correlations is that some consumption is shifting from informal (harder to tax) markets to formal (easier to tax markets) as cash use declined and card use grew. Also, rising electronic payments likely explains improved VAT compliance as well—the Argentine VAT noncompliance rate averaged 36.4% between 2000 and 2005 but improved to 20.5% between 2006 and 2010 (Trigueros, Longinotti, & Vecorena, 2013).

Consumer Payment Preferences, Network Externalities, and Merchant Card Acceptance: An Empirical Investigation

The two-sided market theory holds that consumer adoption and merchant acceptance of payment cards are interdependent. However, empirical evidence on such network externalities is scarce, especially for the merchant side. This paper addresses this issue by examining merchant card acceptance in France. We exploit shopping diary data to construct a novel and fine-grained measure of French consumers’ payment preferences and match these with data from a nation-wide merchant survey. Controlling for (among other factors) cost, degree of competition, and customer characteristics, we find that the higher the probability that the average basket of a merchant is paid for by card in shops in the same sector and region, the higher the probability that the merchant will accept cards. In other words, we find that consumer preferences drive merchant card acceptance, which underpins the existence of network externalities on the merchant side of the payment card market.

Cash only? Unveiling preferences for a PES contract through a choice experiment in Chiapas, Mexico

Payments for Ecosystem Services (PES) have been promoted worldwide as a means to incentivise biodiversity, forest conservation and sustainable forest management. Mexico has been at the forefront of PES implementation since 2003, and the country has now more than 2.6 million hectares under a variety of PES contracts. In this article, we perform a choice experiment with a group of 82 community forest owners who are receiving a payment for providing biodiversity-related ecosystem services in the state of Chiapas. Considering possible future evolutions in contract design, we explore individuals preferences over contract characteristics including who is involved in deciding the parcels to be included in the contract, the type of technical intermediary, the level of payment and the type of incentive (either in individual cash payments or in collective investments). Our results show a reluctance to decide collectively on issues related to forest conservation, as well as on dedicating a share of payments to collective projects. We find strong individual preferences for payments in cash, even when the amount of monetary compensation is lower than in the existing PES contract, and we show that most participants value positively the help received by external service providers in PES implementation. An analysis of preference heterogeneity suggests that community leaders play a key role in moderating individual preferences and enhancing participation structured around working groups. We thus argue that the willingness to accept a PES program is greatly dependent on local governance factors. As such, exploring ways for PES contractual options to match the diversity of local conditions and individual preferences – allowing a modular allocation of PES into cash or investment on an individual or collective basis- could further stimulate participation in Mexico’s PES programme.

Merchant Acceptance of Payment Cards in France: 'Le Client Est Roi!'

The two-sided market theory holds that consumer adoption and merchant acceptance of payment cards are interdependent. However, empirical evidence on such network externalities is scarce, especially for the merchant side. This paper uses a logit model to explain merchant card acceptance in France. We exploit shopping diary data to construct a novel and fine-grained measure of French consumers’ payment preferences and match these with data from a nation- wide merchant survey. Controlling for, among other factors, cost, degree of competition, and customer characteristics, we find that the higher the probability that the average basket of a merchant is paid for by card in shops in the same sector and region, the higher the probability that the merchant will accept cards. In other words, we find that consumer preferences drive merchant card acceptance, which underpins the existence of network externalities on the merchant side of the payment card market.

Trends and Preferences in Consumer Payments: Updates from the Visa Payment Panel Study

Michael Marx, senior director, Visa Research Insights, conducted a workshop in 2009 at the Payment Cards Center (PCC) as the economy was emerging from a recession. At that time, it appeared that the recession had affected consumer payment preferences, especially those related to cash and credit cards. To get an update on consumers' use of the various payment methods, the PCC invited Marx to facilitate another workshop in 2014. More recent findings from the Visa Payment Panel Study reveal declines in cash use -- a return to the long-term trend -- and increases in credit card use, perhaps signaling some return of confidence among consumers. Check use continued its unbroken long-term decline, and debit card growth has slowed. Private label cards have also registered a steady decline in their share of spending volume for a number of years. Their revolving credit utility, however, remains consequential in financing consumer purchases.

Pump-Priming Payments for Sustainable Water Services in Rural Africa

Locally managed handpumps provide water services to around 200 million people in rural Africa. Handpump failures often result in extended service disruption leading to high but avoidable financial, health, and development costs. Using unique observational data from monitoring handpump usage in rural Kenya, we evaluate how dramatic improvements in maintenance services influence payment preferences across institutional, operational, and geographic factors. Public goods theory is applied to examine new institutional forms of handpump management. Results reveal steps to enhance rural water supply sustainability by pooling maintenance and financial risks at scale supported by advances in monitoring and payment technologies.

Trends and Preferences in Consumer Payments: Updates from the Visa Payment Panel Study

Michael Marx, senior director, Visa Research Insights, conducted a workshop in 2009 at the Payment Cards Center (PCC) as the economy was emerging from a recession. At that time, it appeared that the recession had affected consumer payment preferences, especially those related to cash and credit cards. To get an update on consumers? use of the various payment methods, the PCC invited Marx to facilitate another workshop in 2014. More recent findings from the Visa Payment Panel Study reveal declines in cash use ? a return to the long-term trend ? and increases in credit card use, perhaps signaling some return of confidence among consumers. Check use continued its unbroken long-term decline, and debit card growth has slowed. Private label cards have also registered a steady decline in their share of spending volume for a number of years. Their revolving credit utility, however, remains consequential in financing consumer purchases.

Healthcare payment reforms across western countries on three continents: Lessons from stakeholder preferences when asked to rate the supportiveness for fulfilling patients’ needs

To test the hypothesis that care typology-being complex and highly unpredictable versus being clear-cut and highly predictable-guides healthcare payment preferences of physicians, policy makers, healthcare executives, and researchers.We collected survey data from 942 stakeholders across Canada, Europe, Oceania, and the United States. A total of 48 international societies invited their members to participate in our study. Study designCross-sectional analysis of stakeholder survey data linked to four scenarios of care typology: primary prevention, trial-and-error care, standard care and network care. Principal findingsWe identified two “extremes”: (1) dominant preferences of physicians, who embraced fee for service (FFS), even when this precludes the advantages of other payment systems associated with a minimal risk of harm (OR 1.85 for primary prevention; OR 1.89 for standard care, compared to non-physicians); and (2) the dominant preferences of healthcare executives and researchers, who supported quality bonus or adjustment (OR 1.92) and capitation (OR 2.05), respectively, even when these could cause harm. ConclusionsBased on exploratory findings, we can cautiously state that payment reform will prove to be difficult as long as physicians, healthcare executives, and researchers misalign payment systems with the nature of care. Replication studies are needed to (dis)confirm our findings within representative subsamples per area and stakeholder group.

Design and Promotion Strategy of Marketing Platform of Aquatic Auction based on Internet

For the online trade and promotion of aquatic products and related materials through the network between supply and demand, the design content and effective promotional strategies of aquatic auctions online marketing platform is proposed in this paper. Design elements involve the location of customer service, the basic function of the platform including the purchase of general orders, online auctions, information dissemination, and recommendation of fine products, human services, and payment preferences. Based on network and mobile e-commerce transaction support, the auction platform makes the transaction of aquatic products well in advance. The results are important practical value for the design and application of online marketing platform of aquatic auction.

Credit Card Debt and Payment Use

Approximately half of credit card holders in the United States regularly carry unpaid credit card debt. These so-called 'revolvers' exhibit payment behavior that differs from the behavior of those who repay their entire credit card balance every month. So far there has been no empirical analysis exploring the relationship between revolving behavior and patterns of payment use, such as substitution away from credit cards to other payment methods. Using data from the 2005 Study of Consumer Payment Preferences, we find that credit card revolvers are significantly more likely to use debit and less likely to use credit than convenience users who repay their balances each month. There is no difference between the two groups in their use of check or cash. Revolvers are also more likely to see debit as superior with respect to control over money and budgeting. The findings suggest that revolvers not only adopt, but also use, debit more frequently, as the means to control their spending.

The Safety of Cash and Debit Cards: A Study on the Perception and Behaviour of Dutch Consumers

This paper investigates the impact of consumers’ safety perception on debit card and cash usage. A conceptual framework of safety perception and payment behaviour is introduced and tested with 2008 consumer survey data. The results demonstrate that consumers’ payment preferences for cash and debit cards are strongly affected by how consumers assess the likelihood and seriousness of safety incidents related to cash, debit cards and ATM withdrawals. Risk aversion, personal characteristics and personal experiences all play a significant role. This study underlines the importance of effective safety measures, which minimise the risks inherent in the payment system, and of clear communication towards consumers, so that they may continue to pay efficiently and safely in all circumstances.

Information Infrastructure for Consumer Health: A Health Information Exchange Stakeholder Study

An enabling infrastructure for population-wide health information capture and transfer is beginning to emerge in the U.S. However, the essential infrastructure component that is still missing is effective health information exchange (HIE). Health record banks (HRBs) are one of several possible approaches to achieving HIE. Is the approach viable? If so, what requirements must be satisfied in order for it to succeed? The research, conducted in 2007-2008, explored HRB-related interests, concerns, benefits, payment preferences, design requirements, value propositions, and challenges for 12 healthcare stakeholder groups and the consumers they serve in a U.S. metropolitan area of 1.3 million people. A mixed-methods design was developed in a community action research context. Data were gathered and analyzed through 23 focus groups, 13 web surveys, a consumer phone survey (nonstratified random sample) and follow-up meetings. Recruiting goals for leaders representing targeted groups were achieved using a multi-channel communications strategy. Key themes were identified through data triangulation. Then, requirements, value propositions and challenges were developed through iterative processes of interaction with community members. Results include key themes, design requirements, value propositions, and challenges for 12 stakeholder groups and consumers. The research provides a framework for developing a consumer permission-driven, financially sustainable, community HRB model. However, for such a model to flourish, it will need to be part of a nationwide network of HIEs with compatible HRB approaches able to overcome a number of challenges.

The Effect of Attractiveness on Food Sharing Preferences in Human Mating Markets

The current study explored how physical attractiveness affects food sharing by studying payment preferences for hypothetical romantic dinner dates (a hypothetical mating market). We analyzed payment preferences, self-rated attractiveness, and rated attractiveness for hypothetical dates in 416 participants. We hypothesized that (1) men would be more likely to prefer to pay than would women, (2) attractive individuals of both sexes would be less willing to pay, and (3) preferences to enter an exchange would be influenced by the attractiveness of prospective partners such that (3a) men would prefer to pay for attractive women, and (3b) women would prefer to be paid for by attractive men. All hypotheses were supported by our results. Individuals with higher self-rated attractiveness were more likely to prefer that their date would pay for the meal, and we found clear sex differences in how the attractiveness of potential dates affected payment preferences. Male participants preferred to pay for dates that had higher facial attractiveness, while female participants preferred that attractive men would pay. Individuals show condition dependent financial preferences consistent with the provisioning hypothesis in this mating market that are adaptive to evaluations of their own quality and that of prospective partners.

Willingness to pay for water on the Guyana east coast

Improvements in the water supply and wastewater sectors in Guyana are recognised as being critical to poverty reduction and sustainable economic growth. Such improvements, however, cannot be effected without the water utility companies maximising cost recovery which requires a high level of willingness to pay on the part of consumers. This research was carried out on the east coast of Guyana to establish households' willingness to pay for water supply improvements. A questionnaire was used to collect data on several socio-economic variables, water supply status, utility payment preferences and willingness to pay. Using probit statistical techniques, willingness-to-pay values were estimated. The results of this study are consistent with others, that show that household income, level of education, employment status of the head of the household and level of consumers' awareness are the principal factors influencing willingness to pay for services. The results also show that the demand is inelastic and that the numerical value of price elasticity (−0·85) is close to one which may be due to the current wide use of the rainwater harvesting substitute. It is recommended that Guyana Water Incorporated consider the results of this study in its policy formulation for improving its services.

A case of constitutional apples and oranges: a functional comparison of pension priority and benefit guarantees in U.S., U.K. and Canadian insolvency and pension law regimes

AbstractCanada's insolvency law reform increased the priority granted to employer‐sponsored pension claims. The article compares the treatment of such claims in the U.S., the U.K. and Canada. A comparison of the legislative provisions concerning pension funding shortfalls from contribution arrears or economic underperformance in relation to the assumptions used for investment income or liability valuations finds that insolvency law has been used to address contribution arrears, but risks from economic underperformance have been addressed by pension benefit insurance. Post‐insolvency priority for contribution arrears provides appropriate incentives to discourage pre‐insolvency preferences for payments to other creditors, while shortfalls from economic underperformance do not involve issues of preference between creditors. The absence of any insolvency rationale for changing priority for shortfalls from economic underperformance and the likely disparity between the assets available to satisfy clams and the much larger amounts of such shortfalls makes the use of insolvency law to address this risk much less effective than insurance. Canada, however, has not adopted the insurance policy instrument used in the U.S. and U.K. to mitigate the impact of pension funding shortfalls. The constitutional inability of Canada to legislate in respect of matters of pension regulation that would allow it to control the well‐known insurance problems of moral hazard and adverse selection may explain why it has only chosen to adopt an insolvency policy instrument. However, a change in priorities in insolvency may generate incentives for secured creditors that either undermine or reinforce this policy choice. Secured creditors could attempt to circumvent the new priority scheme through private arrangements with the debtor or to increase their monitoring activities to ensure the debtor is current in its pension contributions. Secured creditors choices will be influenced by the bankruptcy courts' interpretation of the preference provisions in the insolvency legislation. Copyright © 2009 John Wiley & Sons, Ltd.

Farm credit member‐borrowers' preferences for patronage payments

PurposeMany associations in the Farm Credit System, which are financial cooperatives, pay their member‐borrowers a cash patronage payment based on the amount of loan volume with the association. In today's competitive lending environment, some Farm Credit associations have offered lower interest rates on new loans but these new member‐borrowers have to forgo their cash patronage payment to receive this new, lower‐interest rate loan. The purpose of this paper is to identify Farm Credit member‐borrowers' preferences for patronage refunds received as a cash payment versus lower fixed real estate interest rates.Design/methodology/approachPreferences for patronage refunds or lower fixed interest rates are elicited from Farm Credit Services of East Central Oklahoma member‐borrowers via conjoint analysis.FindingsResults show that member‐borrowers strongly prefer patronage refunds compared to lower fixed interest rates.Originality/valueThis paper fulfills a need to better understand patronage refund programs within the Farm Credit System.