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Working Papers

April 2014, No. 14-09R

Payment Choice and Currency Use: Insights from Two Billion Retail Transactions (Revised September 2016)

Zhu Wang and Alexander L. Wolman

Using three years of transactions data from a discount retailer with thousands of stores, we study payment variation along three dimensions: transaction size and location; weekly and monthly frequencies; and longer time horizons. In each case, we connect empirical patterns to theories of money demand and payments. We show that cross-sectional and time-series payment patterns are consistent with a theoretical framework in which individual consumers choose between cash and non-cash payments based on a threshold transaction size, and we evaluate factors that may account for the variation in threshold distributions across locations and time.

Supplementary Appendix

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