Payment card rewards programs and consumer payment choice

Andrew Ching, Fumiko Hayashi

Research output: Contribution to journalArticle


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.

Original languageEnglish (US)
Pages (from-to)1773-1787
Number of pages15
JournalJournal of Banking and Finance
Issue number8
Publication statusPublished - Aug 1 2010
Externally publishedYes



  • Consumer choice
  • Merchant discount fees
  • Payment methods
  • Rewards programs

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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