Research Discussion Papers, Bank of Finland
No 27/2004:
Less cash on the counter: Forecasting Finnish payment preferences
Hanna Jyrkönen
Abstract: Finnish payment methods have changed rapidly as payment
cards have gained increasing popularity and have, to an extent, replaced
cash. This article examines this phenomenon and the trends in cash and
electronic payment methods in Finland. It starts with an introduction to
the statistical data on different payment methods used at points of sale
and their electronification, after which learning curve and dynamic
regression models are employed to analyse changes in the share of cash
payments. Finally, forecasts are presented for the future path of the
cash-share.
The data indicate that the use of cards, especially debit
cards, has increased substantially. For example, in 1984 some 80% of total
purchases (in value terms) were made with cash, whereas by 2002 the
corresponding figure had dropped below 50%. Estimation results suggest that
learning curve models are not suitable for explaining electronification of
payment methods in Finland – at least at this stage – whereas the error
correction model and its special-case partial adjustment model, coupled
with independent explanatory variables, seem to do a better job. A forecast
based on the latter indicates that electronification will continue in
future and that by 2010 the cash-share of total value of point-of-sale
payments will fall to less than 30%.
Keywords: retail payments; payment instruments; electronification; (follow links to similar papers)
JEL-Codes: G20; G21; G28; (follow links to similar papers)
56 pages, October 13, 2004
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
0427.pdf 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Minna Nyman ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
