Working Paper

Cashless Stores and Cash Users

Abstract: The emergence of cashless stores has led several cities and states to ban such stores. This article investigates this issue by characterizing consumers who pay cash for in-person purchases and consumers who do not have credit or debit cards. Using a random utility model, I estimate 1.3 to 30.9 percentage drop in average per-payment consumer surplus if all stores were to become cashless and when utility is measured by the cost of making a payment, security, and convenience. The conclusion provides a discussion of alternatives to cash for in-person purchases that may be needed before all brick-and-mortar stores become cashless.

Keywords: cashless stores; banning cashless stores; consumer payment choice; in-person purchases; alternatives to cash; random utility;

JEL Classification: D9; E42;

https://doi.org/10.29338/wp2019-11a

Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: FRB Atlanta Working Paper

Publication Date: 2019-08-01

Number: 2019-11

Pages: 26 pages