Template-type: ReDIF-Paper 1.0
Author-Name: Martin Brown
Author-Name-First: Martin
Author-Name-Last: Brown
Author-Person: pbr129
Author-Name: Yves Nacht
Author-Name-First: Yves
Author-Name-Last: Nacht
Author-Person: pna803
Author-Name: Dr. Thomas Nellen
Author-Name-First: Thomas
Author-Name-Last: Nellen
Author-Person: pne256
Author-Name: Helmut Stix
Author-Name-First: Helmut
Author-Name-Last: Stix
Author-Person: pst5
Title: Cashless payments and consumer spending
Abstract: We examine how payment choice affects discretionary spending for a representative sample of consumers. Our analysis is motivated by a model of intertemporal choice in which intramonth liquidity constraints are endogenously determined by payment choice and cash management. In the model, present-biased consumers overspend if they choose to pay by card, as their spending is not limited by the amount of cash at hand. Our empirical analysis is based on matched payment diary, payment methods and behavioral survey data. We find that present-biased consumers spend more, the more often they use cashless payment instruments. The effect of cashless payments on spending is strong both for low- and high-income consumers but not among young consumers. We find no robust evidence that consumers choose cash payments to self-constrain their spending.

Length: 80 pages
Creation-Date: 2023
Contact-Email: forschung@snb.ch
File-URL: https://www.snb.ch/en/publications/research/working-papers/2023/working_paper_2023_06
File-Format: text/html
Number: 2023-06
Classification-JEL: E41, G20, O33, D14
Keywords: Digital payments, Cash management, Payment choice, Present bias, Intertemporal choice, Preanalysis plan
Handle: RePEc:snb:snbwpa:2023-06