Payment Features and Incentives as Drivers for Non-Cash Payments Usage – the Evidence from Poland

Janina Harasim, Monika Klimontowicz

Abstract


Theoretical background: There is evidence that sustainable economic growth is strictly connected with non-cash payments development. Nevertheless, in many countries, cash still remains the dominant means of payment. Cash can be treated as a store of value and a means of payment. The paper focuses on its transactional function and addresses the need to recognise drivers that can shift consumers away from cash.

Purpose of the article: The paper aims to analyse what features of payment instruments and what kind of incentives could convince consumers to switch from cash to non-cash payments.

Research methods: The data analysed were collected during the first survey on this topic conducted in 2018 on a representative sample of Polish consumers. The selected statistical methods were applied to analyse research data. Among them are correlation analysis and Thurstone’s method of paired comparisons to analyse preferences and association (co-occurrence) for exploring consumers’ preferences related to their payment choices.

Main findings: The results show that in Poland consumers’ payment choices are driven rather by the cost than other payment instrument features such as speed, convenience or security. These results are consistent with the greater sensitivity of Polish consumers to financial incentives than material bonuses or tax benefits. The analysis has also shown a statistically significant correlation between the kind of incentive and the consumer’s characteristics.


Keywords


cash usage; payment features; payment choices; discounts and surcharges; price incentives; contactless payments

Full Text:

PDF

References


Agarwal, S., Chakravorti, S., & Lunn, A. (2010). Why do banks reward their customers for using their credit cards? FRB of Chicago Working Papers, 2010-19, 1–46. Retrieved from https://www.chicagofed.org/publications/working-papers/2010/wp-19

Amromin, G., & Chakravorti, S. (2007). Debit card and cash usage: A cross-country analysis. FRB of Chicago Working Papers, 2007-04. Retrieved from https://ssrn.com/abstract=981236; doi:10.2139/ssrn.981236

Amromin, G., Jankowski C., & Porter, R.D. (2007). Transforming payment choices by doubling fees on the Illinois Tollway. Economic Perspectives, 31(2), 22–47. Retrieved from https://www.chicagofed.org/publications/economic-perspectives/2007/2qtr2007-part2-amromin-etal

Arango, C., Hyunh, K., & Sabetti, L. (2011). How do you pay? The role of incentives at the point-of-sale. European Central Bank, Working Paper Series, 1386, 1–42. Retrieved from https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp1386.pdf

Arango, C., Huynh, K.P., & Sabetti, L. (2016). Consumer payment choice: Merchant card acceptance versus pricing incentives. Journal of Banking and Finance, 55, 130–141. doi:10.1016/j.jbankfin.2015.02.005

Arifovic, J., Duffy, J., & Hua Jiang, J. (2017). Adoption of a new payment method: Theory and experimental evidence. Bank of Canada Staff Working Papers, 2017-28, 17–28. doi:10.34989/swp-2017-28

Bagnall, J., Bounie, D., Huynh, K.P., Kosse, A., Schmidt, T., Schuh, S., & Stix, H. (2016). Consumer cash usage: A cross-country comparison with payment diary survey data. European Central Bank, 12(4), 1–61. Retrieved from http://www.ijcb.org/journal/ijcb16q4a1.pdf

Bech, B., Faruqui, U., Ougaard, F., & Picillo, C. (2018). Payments are a-changin’, but cash still rules. BIS Quarterly Review, 67–80. Retrieved from http://www.bis.org/publ/qtrpdf/r_qt1803g.pdf

Bolt, W., Jonker, N., & van Renselaar, C. (2010). Incentives at the counter: An empirical analysis of surcharging card payments and payment behaviour in the Netherlands. Journal of Banking & Finance, 34(8), 1738–1744. doi:10.1016/j.jbankfin.2009.09.008

Borzekowski, R., & Kiser, E.K. (2008). The choice at the checkout: Quantifying demand across payment instruments. International Journal of Industrial Organization, 26(4), 889–902. doi:10.1016/j.ijindorg.2007.07.006

Borzekowski, R., Kiser, E.K., & Ahmed, S. (2008). Consumers’ use of debit cards: Patterns, preferences, and price response. Journal of Money, Credit and Banking, 40, 149–172. doi:10.1111/j.1538-4616.2008.00107.x

Bounie, D., & Francois, A. (2006). Cash, check or bank card? The effects of transaction characteristics on the use of payment instruments. Telecom Paris Economics and Social Sciences Working Paper, ESS-06-05. doi:10.2139/ssrn.891791

Bounie, D., Abel, F., & Van Hove, L. (2017). Consumer payment preferences, network externalities, and merchant card acceptance: An empirical investigation. Review of Industrial Organization, 51, 257–290. doi:10.1007/s11151-016-9543-y

Briglevics, T., & Shy, O. (2014).Why don’t most merchants use price discounts to steer consumer payment choice? Review of Industrial Organization, 44(4), 367–392. doi:10.1007/s11151-014-9419-y

Carbó-Valverde, S., & Liñares-Zegarra, J.M. (2009). How effective are rewards programs in promoting payment card usage? Empirical evidence. ECB Working Paper Series, 1141, 1–38. doi:10.2139/ssrn.1522029

Carbó-Valverde, S., Liñares-Zegarra, J.M., & Rodríguez-Fernández, F. (2012). Feedback loop effects in payment card markets: Empirical evidence. Review of Network Economics, 11(2), 1–24. doi:10.1515/1446-9022.1268

Carlos, A., & Taylor, V. (2009). Merchants’ costs of accepting means of payment: Is cash the least costly? Bank of Canada Review, winter 2008–2009, 15–23. Retrieved from https://www.bankofcanada.ca/wp-content/uploads/2010/06/arango_taylor.pdf

Cevik, S. (2020). Dirty money: Does the risk of infectious disease lower demand for cash? International Finance, 23(3), 460–471. doi:10.1111/infi.12383

Chen, L.D. (2008). A model of consumer acceptance of mobile payment. International Journal of Mobile Communications, 6(1), 32–52. doi:10.1504/IJMC.2008.015997

Ching, A., & Hayashi, F. (2010). Payment cards reward programs and consumer payment choice. Journal of Banking & Finance, 34(8), 1773–1787. doi:10.1016/j.jbankfin.2010.03.015

De Grauwe, P., Rinaldi, L., & Van Cayseele, P. (2006). Issues of Efficiency in the Use of Cash and Cards. University of Leuven. Retrieved from https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.629.5066&rep=rep1&type=pdf

Gross, D.B., & Souleles, N.S. (2002). Do liquidity constraints and interest rates matter for consumer behavior? Evidence from credit card data. The Quarterly Journal of Economics, 117(1), 27–52. doi:10.1162/003355302753399472

Harasim, J. (2015). Zwyczaje płatnicze konsumentów a możliwości ograniczenia obrotu gotówkowego w Polsce. Cracow Review of Economics and Management, 2(938), 17–30. doi:10.15678/ZNUEK.2015.0938.0202

Harasim, J. (2016). Europe: The shift from cash to non-cash transactions. In J. Górka (Ed.), Transforming Payment Systems in Europe (pp. 28–69). London: Palgrave Macmillan. Retrieved from https://link.springer.com/chapter/10.1057/9781137541215_2

Hasan, I., De Renzis, T., & Schmiedel, H. (2013). Retail payments and the real economy. ECB Working Paper Series, 1572. doi:10.2139/ssrn.2302527

Hastie, T., Tibshirani, R., & Friedman, J. (2001). The Elements of Statistical Learning. Data Mining, Inference and Prediction. Springer Verlag. Retrieved from https://link.springer.com/book/10.1007/978-0-387-84858-7

Hayashi, F., & Klee, E. (2003). Technology adoption and consumer payments: Evidence from survey data. Review of Network Economics, 2(2), 175–190. doi:10.2202/1446-9022.1025

Hedman, J., Tan, F.B., Holst, J., & Kjeldsen, M. (2017). Taxonomy of payments: A repertory grid analysis. International Journal of Bank Management, 35(1), 75–96. doi:10.1108/IJBM-12-2015-0187

Hoang, D.P., & Vu, T.H. (2020). A transaction cost explanation of the card-or-cash decision among Vietnamese debit card holders. International Journal of Bank Management, 38(7), 1635–1664. doi:10.1108/IJBM-05-2019-0191

Hsee, K., Yu, C.F., Zhang, J., & Yan, Z. (2003). Medium maximization. Journal of Consumer Research, 30, 1–14. doi:10.1086/374702

Humphrey, D., Kim, M., & Vale, B. (2001). Realizing the gains from electronic payments: Costs, pricing, and payment choice. Journal of. Money, Credit, and Banking, 33(2), 216–234. doi:10.2307/2673882

Jonker, N. (2007). Payment instruments as perceived by consumers – results from a household survey. De Economist, 155(3), 271–303. doi:10.1007/s10645-007-9062-1

Karjaluoto, H., Shaikh, A.A., Leppäniemi, M., & Luomala, R. (2020). Examining consumers’ usage intention of contactless payment systems. International Journal of Bank Management, 38(2), 75–96. doi:10.1108/IJBM-04-2019-0155

Kemppainen, K. (2003). Competition and regulation in European retail payment systems. Bank of Finland Discussion Papers, 16. Retrieved from https://www.econstor.eu/handle/10419/211949

Kennickell, A.B., & Kwast, M.L. (1997). Who uses electronic banking? Results from the 1995 survey of consumer finances. Proceedings of the 33rd Annual Conference on Bank Structure and Competition, Federal Reserve Bank of Chicago, 56–75. Retrieved from https://www.federalreserve.gov/pubs/feds/1997/199735/199735pap.pdf

Klee, E. (2006). Families’ use of payment instruments during a decade of change in the US payment system. Finance and Economics Discussion Series, 2006-01, 1–54. Retrieved from https://www.federalreserve.gov/pubs/feds/2006/200601/200601pap.pdf

Klee, E. (2008). How people pay: Evidence from grocery store data. Journal of Monetary Economics, 55(3), 526–541. doi:10.1016/j.jmoneco.2008.01.009

Kosse, A. (2013). The safety of cash and debit cards: A study on the perception and behaviour of Dutch consumers. International Journal of Central Banking, 9(4), 77–98. Retrieved from https://www.ijcb.org/journal/ijcb13q4a3.htm

Kosse, A., Chen, H., Felt, M.H., Dongmo Jiongo, V., Nield, K., & Welte, A. (2017). The costs of point-of-sale payments in Canada. Bank of Canada Staff Discussion Papers, 2017-4. Retrieved from https://www.bankofcanada.ca/wp-content/uploads/2017/03/sdp2017-4.pdf

Kotkowski, R., Dulinicz, M., & Maciejewski, K. (2021). Zwyczaje płatnicze w Polsce w 2020 r. Warszawa: NBP. Retrieved from https://www.nbp.pl/systemplatniczy/zwyczaje_platnicze/zwyczaje_platnicze_Polakow_2020p.pdf

Koulayev, S., Rysman, M., Schuh, S., & Stavins, J. (2016). Explaining adoption and use of payment instruments by US consumers. RAND Journal of Economics, 47(2), 293–325. doi:10.1111/1756-2171.12129

Koźliński, T. (2017). Wybrane wyniki badania Polaków nt. korzystania z usług bankowych i płatności 2016. Warszawa: NBP. Retrieved from https://www.nbp.pl/systemplatniczy/obrot_bezgotowkowy/Polacy-na-temat-uslug-bankowych_2016.pdf

Maison, D. (2010). Postawy Polaków wobec obrotu bezgotówkowego. Warszawa: NBP. Retrieved from https://www.nbp.pl/systemplatniczy/obrot_bezgotowkowy/postawy_polak%C3%B3w_wobec_obrotu_bezgotowkowego_raport.pdf

Maison, D. (2017). Postawy Polaków wobec obrotu bezgotówkowego. Raport z badania 2016 i analiza porównawcza z danymi z 2009 i 2013 roku. Warszawa: NBP. Retrieved from https://www.nbp.pl/badania/seminaria/8v2017.pdf

Maison, D. (2021). Postawy Polaków wobec obrotu bezgotówkowego. Raport z badania 2021 i analiza porównawcza z danymi z 2009, 2013 i 2016 roku. Warszawa: NBP. Retrieved from https://www.nbp.pl/systemplatniczy/obrot_bezgotowkowy/obrot-bezgotowkowy-2021.pdf

Mester, L.J. (2012). Changes in the use of electronic means of payment: 1995–2010. FRB of Philadelphia Business Review, Q3, 25–36. Retrieved from https://www.philadelphiafed.org/-/media/frbp/assets/economy/articles/business-review/2012/q3/brq312_changes-in-use-of-electronic-means-of-payment-1995-2010.pdf

NBP. (2020). Informacja o kartach płatniczych – I kwartał 2020 r. Warszawa: NBP. Retrieved from https://www.nbp.pl/systemplatniczy/karty/q_01_2020.pdf

Pousttchi, K. (2008). A modelling approach and reference models for the analysis of mobile payment use cases. Electronic Commerce Research and Applications, 7(2), 182–201. doi:10.1016/j.elerap.2007.07.001

Raman, P., & Aashish, K. (2020). To continue or not to continue: A structural analysis of antecedents of mobile payment systems in India. International Journal of Bank Management, 39(2), 242–271. Retrieved from https://www.emerald.com/insight/content/doi/10.1108/IJBM-04-2020-0167/full/html

Rochet, J.-C., & Tirole, J. (2003). Platform competition in two-sided markets. Journal of European Economic Association, 1, 990–1029. doi:10.1162/154247603322493212

Schierz, P.G., Schilke, O., & Wirtz, B.W. (2010). Understanding consumer acceptance of mobile payment services: An empirical analysis. Electronic Commerce Research and Applications, 9(3), 209–216. doi:10.1016/j.elerap.2009.07.005

Schmiedel, H., Kostova, G., & Ruttenberg, W. (2012). The social and private costs of retail payment instruments. A European perspective. European Central Bank Occasional Paper Series, 137. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpops/ecbocp137.pdf

Schuh, S., & Stavins, J. (2015). How do speed and security influence consumers’ payment behavior? Contemporary Economic Policy, 34(4), 1–33. doi:10.1111/coep.12163

Shaw, N. (2014). The mediating influence of trust in adopting the mobile wallet. Journal of Retailing and Consumer Services, 21(4), 449–459. doi:10.1016/j.jretconser.2014.03.008

Shy, O., & Stavins, J. (2015). Merchant steering of consumer payment choice: Evidence from a 2012 diary survey. Journal of Behavioral and Experimental Economics, 55, 1–9. doi:10.1016/j.socec.2014.12.006

Simon, J., Smith, K., & West, T. (2010). Price incentives and consumer payment behavior. Journal of Banking & Finance, 34(8), 1759–1772. doi:10.1016/j.jbankfin.2010.02.001

Stavins, J. (2001). Effect of consumer characteristics on the use of payment instruments. New England Economic Review, 16, 20–33. Retrieved from https://www.bostonfed.org/publications/new-england-economic-review/2001-issues/issue-number-3-2001/effect-of-consumer-characteristics-on-the-use-of-payment-instruments.aspx

Stavins, J. (2013). Security of retail payments: The new strategic objective. FRB of Boston Public Policy Discussion Paper, 13-9, 1–46. Retrieved from http://www.bostonfed.org/economic/ppdp/index.htm

Stavins, J., & Wu, H. (2017). Payment discounts and surcharges: The role of consumer preferences. FRB of Boston Working Paper, 17-4. 1–37. Retrieved from https://www.bostonfed.org/publications/research-department-working-paper/2017/payment-discounts-and-surcharges-the-role-of-consumer-preferences.aspx

Stewart, C., Chan, I., Ossolinski, C., Halperin, D., & Ryan, P. (2014). The evolution of payment costs in Australia. Reserve Bank of Australia Research Discussion Papers, 2014-14. Retrieved from https://www.rba.gov.au/publications/rdp/2014/pdf/rdp2014-14.pdf

Thurstone, L. (1927). A law of comparative judgment. Psychological Review, 34(4), 273–286. doi:10.1037/h0070288

Van der Cruijsen, C., & Van der Horst, F. (2016). Payment behaviour: The role of socio-psychological factors. DNB Working Paper, 532. Retrieved from https://www.dnb.nl/media/m4odd4cf/working-paper-532.pdf

Von Kalckreuth, U., Schmidt, T., & Stix, H. (2009). Choosing and using payment instruments: Evidence from German microdata. Bundesbank Discussion Papers Series 1: Economic Studies, 36. doi:10.1007/s00181-013-0708-3

Williams, J., & Wang, C. (2017). Reports of the death of cash are greatly exaggerated. FRB of San Francisco. Retrieved from https://www.frbsf.org/our-district/about/sf-fed-blog/reports-death-of-cash-greatly-exaggerated/

Wright, J. (2011). Why do merchants accept payment cards? Review of Network Economics, 9(3), 1–8. doi:10.2202/1446-9022.1221

Zandi, M., Singh, V., & Irving, J. (2013). The impact of electronic payments on economic growth. Moody’s Analytics. Retrieved from https://usa.visa.com/dam/VCOM/download/corporate/media/moodys-economy-white-paper-feb-2013.pdf

Zinman, J. (2009). Debit or credit? Journal of Banking & Finance, 33(2), 358–366. doi:10.1016/j.jbankfin.2008.08.009




DOI: http://dx.doi.org/10.17951/h.2022.56.3.37-59
Date of publication: 2022-12-09 11:19:05
Date of submission: 2022-07-15 00:18:07


Statistics


Total abstract view - 766
Downloads (from 2020-06-17) - PDF - 0

Indicators



Refbacks

  • There are currently no refbacks.


Copyright (c) 2022 Janina Harasim, Monika Klimontowicz

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.