Retail Payment Innovations and Cash Usage: Accounting for Attrition Using Refreshment Samples

• Activity Number: 119
• Type: Topic Contributed
• Date/Time: Monday, August 4, 2014 : 8:30 AM to 10:20 AM
• Sponsor: Survey Research Methods Section
• Author(s): Heng Chen*+ and Marie-Helene Felt and Kim Huynh
• Companies: and Bank of Canada and Bank of Canada
• Keywords: money demand ; attrition bias ; contactless credit cards ; prepaid cards

Abstract

We exploit the panel dimension of the Canadian Financial Monitor (CFM) data to assess the causal impact of retail payment innovations on cash usage. The CFM collects data on methods of payment and cash usage since January 2010. The availability of multiple years of observations should improve our understanding of whether retail payment innovations such as contactless cards and stored value cards reduce cash usage. We estimate a semiparametric panel data model that accounts for general forms of attrition. We find that retail innovations decrease cash usage on average by about three percent.