Convenient prices and cash usage

ABSTRACT

In the decision to use cash instead of an alternative payment method, quite a few factors influence consumers’ choice and the driving forces behind the cash payment preference are associated with two main topics: the socio-demographical factors of consumers and the characteristics of the payment method. However, beyond these factors pricing behaviour is also a crucial factor that affects the consumers’ cash payment preference. This study aims to examine the impact of convenient prices on cash usage behaviour in Turkey by using the micro-level data of the Methods of Payment Survey carried out in 2020 by the Central Bank of the Republic of Turkey (CBRT). Results show that the likelihood of cash usage increases in convenient prices, and it decreases for the amounts for which the individual receives a coin change. The results also show that the consumers’ cash usage decreases with the transaction amount, which shows that cash is preferred mostly in low-value transactions. Alongside the low-value payments primarily paid in cash, an important finding of the study shows that the likelihood of consumers’ cash usage increases with the amounts that match the currency denomination.

KEYWORDS:

• Convenient prices
• cash usage
• household payment preferences
• payment survey

JEL CLASSIFICATION:

• D00
• D11
• H31
• R20

Disclosure statement

No potential conflict of interest was reported by the author(s).