Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash
146 Pages Posted: 2 Oct 2019
Date Written: September 2019
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
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