48 Pages Posted: 2 May 2006
Date Written: February 2006
Time is a significant cost of conducting transactions, and theoretical models predict that transactions costs significantly affect the type of media of exchange buyers use. However, there is little empirical work documenting the magnitude of this effect. This paper uses grocery store scanner data to examine how time affects consumer choices of checks and debit cards. On average, check transactions take thirty percent longer than debit card transactions. This time difference is a significant factor in the choice to use a debit card over a check and offers empirical evidence for transactions costs affecting the use of media of exchange.
Keywords: Payment systems, consumer behavior, checks, debit cards
JEL Classification: G20, D12, E41
Suggested Citation: Suggested Citation
Klee, Elizabeth, Paper or Plastic? The Effect of Time on the Use of Check and Debit Cards at Grocery Stores (February 2006). FEDS Working Paper No. 2006-02. Available at SSRN: https://ssrn.com/abstract=899120 or http://dx.doi.org/10.2139/ssrn.899120