Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2014:21: Do Consumers Pay More Using Debit Cards than Cash? An Experiment

Emma Runnemark (), Jonas Hedman () and Xiao Xiao ()
Additional contact information
Emma Runnemark: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Jonas Hedman: Department of IT Management, Copenhagen Business School, Postal: Department of IT Management, , Copenhagen Business School, , Howitzvej 60, , DK-2000, Copenhagen, , Denmark
Xiao Xiao: Department of IT Management, Copenhagen Business School, Postal: Department of IT Management, , Copenhagen Business School, , Howitzvej 60, , DK-2000, Copenhagen, , Denmark

Abstract: We conduct an incentivized experiment to test whether the willingness to pay is higher for debit cards compared to cash for three consumer products. Our findings support this conjecture also after controlling for cash availability, spending type, price familiarity and consumption habits of the products. The evidence thus suggests that different representations of money matters for consumer behavior.

Keywords: payment methods; debit cards; cash; willingness-to-pay

JEL-codes: D03; D10; E42

10 pages, May 21, 2014

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