Measuring Payment Choice from Bank Survey Data: Can We Identify Consumer and Business Payments?

• Activity Number: 121
• Type: Topic Contributed
• Date/Time: Monday, August 5, 2013 : 8:30 AM to 10:20 AM
• Sponsor: Survey Research Methods Section
• Author(s): Geoffrey Gerdes*+ and Xuemei Liu
• Companies: Federal Reserve Board and Federal Reserve Board
• Keywords: business survey data ; financial structure ; estimation ; money ; production function ; payments

Abstract

A survey of banks can shed light on consumer and business usage of deposit money. As the payment and financial systems evolve, consumers and businesses are using an increasing variety of methods, such as cash, cheques, cards, and so on to make their payments. In making their choices, consumers and businesses face different constraints and opportunities, have different preferences, and therefore exhibit different behaviors. Estimates of national aggregate payment totals from the "supply side" are reasonably precise and exhibit stability over time, but reflect an unknown mix of consumer and business payments. Using a unique survey of a representative sample of U.S. banks that hold deposit money, we explore what we can learn about consumer payments. To do so, we estimate a model of a bank's payments "output" as a function of the "inputs" of consumer accounts, business accounts, stock of transaction deposits, stock of money market deposits, and other environmental factors. Within this framework, we derive separate aggregate consumer and business payment estimates for check, debit card, and ATM withdrawal transactions.