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The Impact of Retail Payment Innovations on Cash Usage

Author

Listed:
  • Ben Fung
  • Kim Huynh
  • Leonard Sabetti
Abstract
Many predict that innovations in retail payment may render cash obsolete. We investigate this possibility in the context of recent payment innovations such as contactless-credit and stored-value cards. We apply causal inference methods on the 2009 Bank of Canada Method of Payment survey, a representative sample of adult Canadians’ shopping behaviour for retail consumption over a three-day period. We find that using contactless credit cards and stored-value cards lead to a reduction in average cash usage for transactions both in terms of value and volume. Sensitivity analysis is undertaken and our estimates are robust to hidden bias.

Suggested Citation

  • Ben Fung & Kim Huynh & Leonard Sabetti, 2012. "The Impact of Retail Payment Innovations on Cash Usage," Staff Working Papers 12-14, Bank of Canada.
    • Handle: RePEc:bca:bocawp:12-14
    as

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    File URL: https://www.bankofcanada.ca/wp-content/uploads/2012/05/wp2012-14_revised.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Econometric and statistical methods; Financial services; Payment clearing and settlement systems;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods

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