@article{ecacda0bf42a44898a3548bcb7be6c79,
title = "Payment card rewards programs and consumer payment choice",
abstract = "By using a unique data set that contains detailed information about consumer payment choice and consumers' attitudes toward each payment method, we estimate the effects of payment card rewards on consumer choice of payment methods. Our approach allows us to control for consumer heterogeneity. We find the effects of rewards to be statistically significant across five retail types. Our policy experiments suggest that for the sub-population who hold both credit and debit cards, removing rewards would increase their share of paper-based payment methods (i.e., cash and checks), measured in terms of in-store transactions, by no more than 4 percentage points.",
keywords = "Consumer choice, Merchant discount fees, Payment methods, Rewards programs",
author = "Ching, {Andrew T.} and Fumiko Hayashi",
note = "Funding Information: The views expressed herein are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Kansas City or the Federal Reserve System. We are grateful for helpful comments received from an anonymous reviewer, Ron Borzekowski, Avi Goldfarb, Kim Huynh, Doug Hyatt, Masakazu Ishihara, Kari Kemppainen, Steven Lu, Sanjog Misra, Mark Ratchford, participants at the 2006 Consumer Behavior and Payment Choice Conference, the 2007 International Industrial Organization Conference, the Economics of Payment Systems Conference at Telecom-Paris, the UT-Dallas Marketing Conference, the Research Conference on Payment Systems at the Norges Bank, and seminar participants at the University of Toronto, Queen{\textquoteright}s University and the Bank of Canada. We also thank the Consumer Payments Research Center at the Federal Reserve Bank of Boston for providing the Dove/ABA consumer survey data. Andrew Ching acknowledges financial support from the SSHRC. ",
year = "2010",
month = aug,
doi = "10.1016/j.jbankfin.2010.03.015",
language = "English (US)",
volume = "34",
pages = "1773--1787",
journal = "Journal of Banking and Finance",
issn = "0378-4266",
publisher = "Elsevier",
number = "8",
}