An Experiment on Retail Payments Systems

SAFE Working Paper No. 49

53 Pages Posted: 6 May 2014

See all articles by Gabriele Camera

Gabriele Camera

Chapman University - Economic Science Institute; University of Bologna - Dept. of Economics

Marco Casari

University of Bologna - Department of Economics

Stefania Bortolotti

MPI for Research on Collective Goods

Multiple version iconThere are 2 versions of this paper

Date Written: May 5, 2014

Abstract

We study the behavioral underpinnings of adopting cash versus electronic payments in retail transactions. A novel theoretical and experimental framework is developed to primarily assess the impact of sellers’ service fees and buyers’ rewards from using electronic payments. Buyers and sellers face a coordination problem, independently choosing a payment method before trading. In the experiment, sellers readily adopt electronic payments but buyers do not. Eliminating service fees or introducing rewards significantly boosts the adoption of electronic payments. Hence, buyers’ incentives play a pivotal role in the diffusion of electronic payments but monetary incentives cannot fully explain their adoption choices. Findings from this experiment complement empirical findings based on surveys and field data.

Keywords: money, coordination, pricing, transactions

JEL Classification: E1, E4, E5

Suggested Citation

Camera, Gabriele and Casari, Marco and Bortolotti, Stefania, An Experiment on Retail Payments Systems (May 5, 2014). SAFE Working Paper No. 49. Available at SSRN: https://ssrn.com/abstract=2433414 or http://dx.doi.org/10.2139/ssrn.2433414

Gabriele Camera (Contact Author)

Chapman University - Economic Science Institute ( email )

Orange, CA 92866
United States

HOME PAGE: http://www1.chapman.edu/~camera/

University of Bologna - Dept. of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Marco Casari

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Stefania Bortolotti

MPI for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

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