How Does Mobile Payment Technology Affect Consumer Payment Behavior?

49 Pages Posted: 3 Jun 2020

See all articles by Liang Zhang

Liang Zhang

Boston College; Federal Reserve Banks - Federal Reserve Bank of Boston

Date Written: May 6, 2020


In recent years, mobile payment technology has been enjoying a rising popularity among consumers. While the innovation provides flexibility and convenience, it could also facilitate consumers' substitution of currency and checks by cards. Furthermore, the technology could affect consumers' credit card behavior. Understanding these possible effects of payment innovation is important for maintaining a healthy financial system and consumers' well-being. This project investigates the effect of mobile payment technology on consumer payment behavior in the context of consumers' choice of point-of-sale (POS) instruments and its implications for credit card behavior. Using a unique panel of U.S. consumers from 2015 to 2018, I find that mobile payment technology is positively associated with credit card use while being negatively associated with cash and check use. In addition to higher credit card usage, the adoption of mobile payment technology is associated with credit card revolving behavior. Applying the heteroskedasticity-based instrumental variable-generalized method of moments approach (IV-GMM), I find arguably causal evidence that mobile payment technology leads to a higher probability of using revolving credit as well as higher revolving balances.

Keywords: Mobile Payment Technology, Credit Card Debt, Household Finance, Consumer Payment, Innovative Technology, FinTech

JEL Classification: D12, D14, G4, O33

Suggested Citation

Zhang, Liang, How Does Mobile Payment Technology Affect Consumer Payment Behavior? (May 6, 2020). Available at SSRN: or

Liang Zhang (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

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