Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash

146 Pages Posted: 2 Oct 2019

See all articles by Fernando Alvarez

Fernando Alvarez

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

David Argente

Pennsylvania State University

Date Written: September 2019

Abstract

We estimate the private benefits for Uber riders from using alternative payment methods. We focus on Mexico, where contrary to the US, riders have the option to use cash or credit cards to pay Uber drives. We use three large field experiments as well as several quasi-natural experiments to estimate the loss in private benefits for riders if a ban of cash as a payment method on Uber is implemented. We find that the Uber riders who use cash as means of payment, either sometimes or exclusively, suffer an average loss of approximately 50% of the expenditure of trips paid in cash before the ban. Further, the cost from the ban on cash falls disproportionately on lower income households.

Keywords: Cash, Credit, Money Demand, Consumer Surplus, Means of Payments

JEL Classification: E4, E5

Suggested Citation

Alvarez, Fernando and Argente, David, Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash (September 2019). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2019-96, Available at SSRN: https://ssrn.com/abstract=3462480 or http://dx.doi.org/10.2139/ssrn.3462480

Fernando Alvarez (Contact Author)

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Social Science Building, Room 442
Chicago, IL 60637
United States
773-702-4412 (Phone)
773-702-8490 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

David Argente

Pennsylvania State University ( email )

606 Kern Building
State College, PA 16801
United States

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