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Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
How the ATM Affects the Way We Pay
Oz Shy

Cash users withdraw money from automated teller machines (ATMs) to finance cash payments. However, most ATMs in the United States dispense only multiples of $20 bills. The paper first constructs a consumer's optimization model showing how the precise denomination of dollar bills available from ATMs affects consumers' decision whether to pay with cash or with (plastic) cards. Then, the paper uses various statistical techniques to conduct empirical analyses of consumers who choose to pay cash for transactions below a certain threshold payment amount and pay with cards for transactions exceeding that threshold.

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Oz Shy, How the ATM Affects the Way We Pay, Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2019-2, 01 Feb 2019.
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Keywords: currency denomination; automated teller machines; ATM; consumer payment choice; payment methods; point of sale
DOI: 10.29338/wp2019-02
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