Cashless Stores and Cash Users
30 Pages Posted: 21 May 2019 Last revised: 23 Oct 2019
Date Written: October 21, 2019
The emergence of cashless stores has led several cities and states to ban such stores. This article investigates this policy issue by characterizing consumers who pay cash for in-person purchases and banked and unbanked consumers who do not have credit or debit cards. Using a random utility model, I estimate 9 to 41 average percentage drop in consumer surplus if all stores were to become cashless and when utility is measured by the cost of making a payment, security, and convenience. The conclusion provides discussions of alternatives to cash that may be needed before all brick-and-mortar stores become cashless.
Keywords: Cashless stores, banning cashless stores, consumer payment choice, in-person purchases, alternatives to cash, random utility analysis
JEL Classification: D9, E42
Suggested Citation: Suggested Citation