Abstract

http://ssrn.com/abstract=2005694
 
 

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Identity Theft and Consumer Payment Choice: Does Security Really Matter?


Charles M. Kahn


University of Illinois, Urbana-Champaign

José Manuel Liñares-Zegarra


University of St. Andrews - School of Management

October 17, 2013


Abstract:     
Security is a critical aspect of electronic payment systems. In recent years, the phenomenon of identity theft has gained widespread media coverage and has grown to be a major concern for payment providers and consumers alike. How identity theft has affected consumer’s payment choice is still an open research question. Using a newly available nationally representative survey from the U.S., we study the effect of identity theft incidents on adoption and usage patterns for nine different payment instruments. Our results suggest that specific identity theft incidents alter the probability of adopting cash, money orders, credit cards, stored value cards, bank account number payments and online banking bill payment, after controlling for socio-demographic and payment characteristics. As for payment usage, we observe a positive and statistically significant effect of certain types of identity theft incidents on cash, money orders and credit cards. However, we also find that specific identity theft incidents could decrease the usage of checks and online banking bill payment. These results are robust across different types of transaction after controlling for various socio-demographic characteristics and perceptions toward payment methods.

Number of Pages in PDF File: 50

Keywords: identity theft, payment choice, Heckman selection model

JEL Classification: G20, D12, E41

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Date posted: February 16, 2012 ; Last revised: April 28, 2014

Suggested Citation

Kahn, Charles M. and Liñares-Zegarra, José Manuel, Identity Theft and Consumer Payment Choice: Does Security Really Matter? (October 17, 2013). Available at SSRN: http://ssrn.com/abstract=2005694 or http://dx.doi.org/10.2139/ssrn.2005694

Contact Information

Charles M. Kahn
University of Illinois, Urbana-Champaign ( email )
Department of Finance
340 Wohlers Hall
Champaign, IL 61820
United States
217-333-2813 (Phone)
HOME PAGE: http://kahnfrance.com/cmk/
Jose Manuel Linares-Zegarra (Contact Author)
University of St. Andrews - School of Management ( email )
The Gateway
North Haugh
St. Andrews, Fife, Scotland KY16 9SS
United Kingdom
HOME PAGE: http://sites.google.com/site/jmlzegarra
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