Consumers' Use of Debit Cards: Patterns, Preferences, and Price Response
By Ron Borzekowski, Elizabeth K. Kiser, S. Ahmed. 2006
243 citations recorded by the source corpus.
Debit card use at the point of sale has grown dramatically in recent years in the U.S., and now exceeds the number of credit card transactions. However, many questions remain regarding patterns of debit card use, consumer preferences when using debit, and how consumers might respond to explicit pricing of card transactions. Using a new nationally representative consumer survey, this paper describes the current use of debit cards by U.S. consumers, including how demographics affect use. In addition, consumers' stated reasons for using debit cards are used to analyze how consumers substitute between debit and other payment instruments. We also examine the relationship between household financial conditions and payment choice. Finally, we use a key variable on bank-imposed transaction fees to analyze price sensitivity of card use, and find a 12 percent decline in overall use in reaction to a mean 1.8 percent fee charged on certain debit card transactions; we believe this represents the first microeconomic evidence in the United States on price sensitivity for a card payment at the point of sale.
Subfields: Marketing, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/a92542db2a99171618c303d58fb4289faf86d5cc
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Citations in the corpus
- Explaining Adoption and Use of Payment Instruments by U.S. Consumers (2016, unknown): “Our paper is closely related to the work of Borzekowski, Kiser, and Ahmed (2008) and Borzekowski and Kiser (2008), which use survey data to study the adoption and use of debit, although they do not study substitution patterns across payment instruments.”
- The choice at the checkout: Quantifying demand across payment instruments (2008, background): “Thus, should a merchant refuse to accept debit, it would expect a substantial increase in cash use.21 Borzekowski et al. (2006) find a substantial price response with respect to debit card fees charged by card-issuing banks; the estimates here suggest that these consumers are most likely to turn to…”
- Consumer payment choice: Merchant card acceptance versus pricing incentives (2015, result): “These results are similar to those for the United States by Borzekowski et al. (2008), who find that the likelihood of paying with debit cards decreases due to debit card transaction fees.”