Cashless Stores and Cash Users
26 Pages Posted: 9 May 2019 Last revised: 21 Oct 2019
Date Written: 2019-05-01
The emergence of cashless stores has led several cities and states to ban such stores. This article investigates this issue by characterizing consumers who pay cash for in-person purchases and consumers who do not have credit or debit cards. Using a random utility model, I estimate 1.3 to 30.9 percentage drop in average per-payment 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 a discussion of alternatives to cash for in-person purchases 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
JEL Classification: D9, E42
Suggested Citation: Suggested Citation