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Determinants of Non-Cash Payments
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The development of the card payment system allows for lowering the costs of money emission and circulation and thereby leads to significant economic gains. Yet relatively small amount of research has been dedicated to the analysis of the determinants of these developments. Therefore, the aim of the article is to seek cross-country determinants of retail card payments. The focus of was put on two econometric models. One was constructed using survey data for Poland, the second model was based on panel data from the EU countries in the years 2000-2012. Based on the results from the second model forecasts for the number of cards and the value of card transactions per person were compiled.
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... There are many reasons of their importance to business. They include development of the card payment system which has enabled reduction of money issue and circulation and thereby led to significant economic gains (Goczek and Witkowski, 2015). ...
... Achievement of the relevant level of development of the cashless transactions system allows reduction of costs of issuing and circulation, i.e., it enables decrease in costs related to delivery and storage of cash by all entities within the economy (Goczek and Witkowski, 2015). Of course, cashless transactions also an impact on transparency. ...
Purpose: The objective of the paper was to define the current attitudes of Poles vs. cashless transactions and their perception of the related risk of Covid-19 infection.
Design/Methodology/Approach: The research method involved a survey, and the research tool was a survey questionnaire distributed by a research agency. The target-amount selection procedure was applied and the sample structure corresponds to the structure of the Polish population with respect to the studied features. The survey sample included 1000 respondents.
Findings: The studied population (of Polish consumers) were less willing to pay with cash during the pandemic than beforehand. This is related with avoiding contact with cash, as well as easy documentation of transactions, increasing their transparency. During the pandemic Polish consumers were more willing to shop at Polish online shops or retail services (e.g. Allegro) than foreign ones (e.g., AliExpress). However, the study shows that Polish customers are more cautious in their shopping decisions during the pandemic, being afraid to lose financial liquidity.
Practical Implications: The pandemic led to landslide changes in consumer behaviours and habits. Identification of the current shape of Polish customers’ attitudes to cashless transactions and their perception of the associated risk of Covid-19 infection is important for all market entities related directly or indirectly to such transactions. Nowadays, it is difficult to even think of a business with no such needs.
Originality/Value: The study presented in the paper is original because there was no research on cashless payments in relation to shopping risk. The article displays an original approach to the subject. The 2020 pandemic itself allows for observation of customers in a completely new situation and development of an entirely new area of consumer behaviour research.
... However, they are still subject to various problems in their use and acceptance. Goczek and Witkowski (2015) point out that a positive benefit of using non-cash payments is the increased fight against the effects of the illegal economy and a clear picture of the operations performed. All this contributes to the countries' fight against illegal actions. ...
Purpose: The purpose of this study is to reveal the readiness of the employees in the banking sector in the Republic of North Macedonia to adapt to the reorganization of working hours while at the same time using the safest payment methods in conditions when the world is trying to deal with the crisis caused by the COVID-19 virus. Need for the study: The world is rapidly moving towards increasing digitalization, which is part of all spheres of human life. The outbreak of the COVID-19 virus pandemic has accelerated these processes by requiring people to adapt to the new conditions. The countries that have worked rapidly to digitize the system, while massively using non-cash payments, have adapted more easily to their regular daily tasks. The Republic of North Macedonia, as a developing country, is trying to take a step forward by introducing the innovations used by developed countries, taking into account the available assets and human resources. Methodology: A method for qualitative forecasting, Delphi, is used in three rounds, and the gained insights serve as inputs in the creation of two analytic hierarchy process (AHP) models.
... Cashless methods have been emerging as payment alternative with several advantages which leads to digital world economy. The adoption of cashless systems allows the reduction of costs related to delivery & storage of cash by all entities within the economy [38]. Cashless economy drives the pace of money distribution to reach almost every one and everywhere at almost any time. ...
Background: The Cashless payments has been used to make payment from one individual/company to another in all over the world. The perceived easy to use and low-cost transaction equipment has attracted vendors to shift to these payments' methods. This study examines various methods of payments, the challenges and benefits faced in cashless economy. Materials and Methods: The study used generic review to explore various scholarly articles to examine the current situations, methods used to make non-cash payments, and to extract the benefits and problems related to digital payments. Results: The study found that there are several methods adopted for digital payments which come up with related problems and benefits. Despite all drawbacks the world is moving towards cashless economy. Conclusion: There is a need to counteract the challenges faced in cashless economy in order to enjoy the perceived benefits that come with it. Specifically, the study recommends the governments among others to facilitate centralized cashless payments methods to boost its adoption. Also, future studies are required to have bullet-proofed secured systems for making cashless payments methods.
... The habit of using cash has been around for a long time and can not easily be replaced with another form of payment (Swiecka and Grima, 2019). Goczek and Witkowski (2015) suggest that the habit may change if there is enough trust of users on types of digital payment, thereby saving the cost of issuing cash and avoiding other policy risks. ...
To study the factors affecting the choice of cashless payments, in cases where customers have a choice between cash and cashless payment, the article used data collected from surveys of 405 individuals residing in two big cities of Vietnam. The paper applied conditional logistic regression to point out the characteristics that affect the non-cash payment decision. The results show that women are more likely to use the service than men and peaking at the age of 36–40. Moreover, income level, occupation, and trust are found to have a significant association with the choice of cashless payment, thereby drawing some practical implications.
As digital financial transactions continue to gain traction globally, understanding the factors that influence the adoption of electronic money (e-money) is crucial. This research paper delves into the behavioral aspects behind the use of e-money within a specific academic community. In a quantitative study carried out at Ar-Raniry State Islamic University's Faculty of Islamic Economics and Business (FEBI), we investigated the impact of utility, convenience, and security on students' interest in selecting e-money as their preferred payment method. The randomized sample of 97 students represented the faculty's diverse population. Our findings emphasize the critical roles of utility and convenience in shaping students' interest in e-money adoption, with attributes like speed, efficiency, and practicality significantly driving their embrace of electronic payment solutions. The research underscores the importance of designing e-money systems that prioritize utility and convenience to attract users, particularly in educational settings, while also providing insights for policymakers and financial institutions seeking to promote digital financial inclusion.
The aim of the chapter is to identify the main determinants of the cashless economy, to characterize its impact on the behaviour of economic agents, and to discuss its potential advantages and disadvantages for various agents. The cashless economy is discussed both from the perspective of economic theory and the perspective of the functioning of monetary and financial systems. The most important determinants of the transition to the cashless economy are discussed: digitalization and new technologies; changes in the activities of commercial banks, which are creators of cashless money and quasi-money instruments; changes in customers’ demand for cash; and macroeconomic factors. The cashless economy seems to offer the largest benefits for banks, central banks and big tech companies. They have used new technologies more intensely and have worked on designing their own digital currencies. However, from the point of view of a household, the cashless economy could deepen financial exclusion.
The aim of the study is to analyze and forecast the use of payment cards for making non-cash payments through national payment systems in Kazakhstan. Based on this goal, a hypothesis was put forward that in Kazakhstan, there is a relationship between the number of payment cards and the volume of non-cash payments. This hypothesis was confirmed because of the study. The information base of the study was the data on payment cards, which were taken from the Statistical Bulletin of the National Bank of the Republic of Kazakhstan. Hypothesis testing was carried out using correlation analysis for three periods: 2009, 2016, 2020. The method of finding Pearson’s correlation in the SPSS program was used. The results showed a downward change in the relationship between the selected indicators and the amount of funds transferred over time. Also, in this study, a forecast was made for 2021-2023 for the indicators under consideration. To make a forecast for the indicators under consideration, a graphical method (polynomial trend line) was used. The resulting forecast shows the growth of cardholders and, consequently, the spread of the number of payment cards among the population in 2021-2023. The practical significance of this study is that the proposed methodology can help predict the dynamics of payment cards in any country in the world. Recommendations are also given for further improving the financial system, since increasing the transparency of monetary circulation in small-and-medium sized businesses will lead to a positive result in the implementation of the program for universal declaration of income in 2025.
For some time, cash is no longer the only method of payment for retail customers, alternative payment instruments like cards, direct debits or other means of making transactions being increasingly preferred by customers. Thus, the substitution of cash with non-cash instruments and the role of paper-based and electronic payments have grown significantly lately. The purpose of this paper is to provide an overview on the latest developments in the use of non-cash instruments and issues related to recent innovations in retail payments.
The aim of the paper is to present the results of the research concerning the usage of two basic payment methods in daily shopping in Poland, i.e. cash and debit card. The data was obtained through the survey conducted in the late 2010 and in the beginning of 2011. The survey covered a representative random sample of 2974 respondents. The usage of the bivariate Poisson model allowed to verify a number of hypotheses. The results showed a significant influence of demographic, social and economic variables on the number of payment transactions performed by both payment methods (cash and debit cards). The research allowed to measure the cardholders price sensitivity on charges related to the card use as well as to promotional offers and discounts designed to encourage customers to active use this type of payment methods. In addition, the research confirmed a strong influence of the customer’s perception of security on the propensity to conduct a transaction with a certain payment method. It was showed that a significant barrier for the growth of card payments are public preferences for anonymity of a payment transaction and for cash the level of anonymity is particularly high. The empirical data did not confirm the hypothesis of the substitution effect between the numbers of cash and debit cards payments. The research allowed to determine payment habits and preferences of Polish customers.
Lessons from the evolution of payment systems in Europe, Japan, and the United States provide a useful guide for emerging market economies in improving their own payment arrangements to foster economic growth. Some payment arrangements are more efficient than others in promoting economic growth in a market-based economy. The payment experience of industrial countries is diverse enough to identify those payment arrangements that provide the infrastructure for sustained growth and the emergence of market-based enterprise. Based on the historical experiences of Europe, Japan, and the United States, a number of country attributes have led to the intensive use of different payment instruments and, in some cases, a different mix of private and public ownership and participation in the payment system. Such attributes include country size, population density, banking structure, legal framework, safety, and payment instrument pricing. These attributes explain why Japan relies heavily on cash at the point of sale but uses electronic payments for bill payments and business transactions. They also are the reason Europe relies on credit-transfer giro payments for all types of transactions and the United States instead relies on checks. Finally, the fact that consumer payment needs were not met within the banking system led to the establishment of postal giros in Europe, while untimely business payments led to central bank involvement in payment processing in the United States. Unmet user needs, inefficient payment arrangements, differences in payment instrument costs, and improper pricing of payment services will determine the future structure of payment systems in emerging market economies just as they have determined the evolution of payment systems in industrial countries. The authors discuss these issues and apply the lessons learned to payment arrangements in emerging market economies. Although the evolution of payments has taken decades in industrial countries, emerging market economies hope to complete the process in just a few years, and so will benefit by having a better roadmap for transforming their payment systems. This paper - a product of the Financial Sector Development Department - is part of a larger effort in the department to promote the development of financial sector infrastructure to support banking and capital market activities.
The relative importance of different retail payment media varies across countries. There are, however, some trends in the data that are evident pan-nationally: cash seems to be playing a lesser role in payment activity; among non-cash forms of payment, there has been a substitution away from paper-based to electronic instruments; and debit cards are being more heavily used in recent years. These developments indicate progress towards a more efficient payment system as older, more expensive payment instruments are supplanted by newer, cheaper options. Viewpoints on what the future may hold in store for retail payments, including perspectives on the impact that new electronic technologies designed for making small-value payments may have on cash usage, are considered. It is argued that while its usage may decline over time, cash is unlikely to disappear from the payments landscape soon.
This article provides a descriptive overview of the payment card industry in Europe and compares the various forms of organization of payment card systems in European countries. This synthesis helps to understand the paradoxes and the challenges entailed in the creation of the Single Euro Payments Area.
When a model for panel data includes lagged dependent explanatory variables, then the habitual estimation procedures are asymptotically valid only when the number of observations in the time dimension (T) gets large. Usually, however, such datasets have substantial sample size in the cross-section dimension (N), whereas T is often a single-digit number. Results on the asymptotic bias (N → ∞) in this situation have been published a decade ago, but, hence far, analytic small sample assessments of the actual bias have not been presented. Here we derive a formula for the bias of the Least-Squares Dummy Variable (LSDV) estimator which has a approximation error. In a simulation study this is found to be remarkably accurate. Due to the small variance of the LSDV estimator, which is usually much smaller than the variance of consistent (Generalized) Method of Moments estimators, a very efficient procedure results when we remove the bias from the LSDV estimator. The simulations contain results for a particular operational corrected LSDV estimation procedure which in many situations proves to be (much) more efficient than various instrumental variable type estimators.
The aim of this work is to arrive at a better understanding of the underlying reasons for the slow adoption of electronic payment instruments in Italy. Our findings indicate that a pivotal role in explaining Italy’s lag in abandoning cash is played by development factors, such as innovative capability and income per capita. Surprisingly, although the shadow economy is important, it is not decisive in explaining the limited use of electronic retail payment instruments.
This paper surveys the growing literature on payments. We begin by presenting a simple model that illustrates the essential function of payments and how this may be implemented through various arrangements. We show how the basic models of payments have been used to address a variety of microeconomic and macroeconomic policy issues. We then discuss the links between payments economics and other fields, including monetary theory, corporate finance, and industrial organization. We conclude with an overview of the empirical literature and directions for future research.
This paper extends the LSDV bias approximations in [Bun, B.J.G., Kiviet, J.F. 2003. On the diminishing returns of higher order terms in asymptotic expansions of bias. Economic letters, 79, 145-152.] to unbalanced panels. The approximations are obtained by modifying the within operator to accommodate the dynamic selection rule. They are accurate, with higher order terms bringing only decreasing improvements to the approximations. This removes an important cause for limited applicability of bias corrected LSDV estimators.
Estimation of the dynamic error components model is considered using two alternative linear estimators that are designed to improve the properties of the standard first-differenced GMM estimator. Both estimators require restrictions on the initial conditions process. Asymptotic efficiency comparisons and Monte Carlo simulations for the simple AR(1) model demonstrate the dramatic improvement in performance of the proposed estimators compared to the usual first-differenced GMM estimator, and compared to non-linear GMM. The importance of these results is illustrated in an application to the estimation of a labour demand model using company panel data.
Assuming that J. S. Mill and others are correct in their belief that trust matters for the economic performance of nations, the determinants of trust become important. Section 2 discusses the sources of trust and briefly summarizes empirical evidence. Section 3 builds on Fukuyama’s concept of the “radius of trust” to identify the type of trust which should be advantageous to national economic performance. Section 4 addresses measurement issues. Evidence on trust and economic performance relies heavily on the use of a single survey indicator of trust: in light of the potential for translation problems and other sources of measurement error, can this indicator be trusted? Section 5 presents empirical evidence on trust and economic performance, for a 25-nation OECD sample and for a larger 40-country sample. Section 6 presents evidence on the relationship between associational life and economic performance, testing the conflicting theoretical perspectives of Putnam (1993) and Olson (1982). Section 7 briefly concludes.