Working Paper

Low-Income Consumers and Payment Choice

Abstract: Low-income consumers are not only constrained with spending, but also with the type and variety of payment methods available to them. Using a representative sample of the U.S. adult population, this paper analyzes the low possession (adoption) of credit and debit cards among low-income consumers who are also unbanked. Using a random utility model, I estimate the potential welfare gains associated with policy options suggested in the literature to provide subsidized and unsubsidized debit cards to this consumer population.

Keywords: consumer payment choice; household income; financial inclusion; unbanked consumers; random utility analysis; diversity; unbanked; consumer surveys; consumer behavior;

JEL Classification: D90; E42;

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Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: FRB Atlanta Working Paper

Publication Date: 2020-02-01

Number: 2020-3