Cash or Card: Consumer Perceptions of Payment Modes - Scholarly ...

Households’ Spending’ run by the Bank of Italy and assessed the impact of debit card use on
monthly household purchases during 1998, 2000 and 2002. Data comprised frequency counts
and relative weighted frequencies of sampled households using cash and non-cash payment
instruments. They concluded that households possessing non-cash payment instruments (at
least one debit card or credit card) spent more compared to those who did not. Thomas et al.
(2011) conducted a complex set of studies into payment mode influence on unhealthy food
purchases and in one study that uses supermarket data they report that expenditure is related
to card use and that consumers spend more on unhealthy food items when they pay by credit
card ((M=$67.6) than when using cash (M= $37.9).
The experimental credit card research does not provide conclusive evidence that credit card
use and/or associations impact purchase behaviour. The supermarket panel data appears to
do so. But this relationship needs to be examined. The variation may be due to the cost of
the transaction. Studies by Klee (2004) in the US and Bounie and Francois (2009) in France
also use grocery store data, and show that the payment mode choice is related to total amount
of the transactions, with card and cheque use dominating in high cost transactions.
Certainly the study by Raghubir and Srivastava (previously described) indicates payment
mode choice is directed by the cost of the transaction. So the purchase decisions may not be
directed by the card, but the final cost at the checkout may. It may be that the choice of
payment is a function of the amount of cash available to the person at the point of payment.
2.5.2: Debit Card Research
Debit cards have two main functions: acting as a transaction medium and accessing liquidity
(personal savings). Debit card use has increased substantially in the past decade as has the
number of investigations into their adoption and use. An early study by Prendergast (1993)
found that debit card use was significantly higher among young people in New Zealand.
Borzekowski et al. (2006) report that several studies in the US that use various versions of the
Survey of Consumer Finances (SCF) all show that debit card users are younger, well-
educated and more likely to be female. Studies in The Netherlands, Belgium and Austria
report similar findings (Jonker, 2005; Loix, Pepermans and Van Hove, 2005; Foscht, Maloles
3rd, Swoboda and Chia, 2010). A few studies report that users of debit cards tend to be debt-
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