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Research on Paying with Cash and Checks
The United States is a land of many firsts: first flight in an airplane (1903). First person on the moon (1969). First email sent (1971). First nation to go fully paperless for payments? Not so likely.
Journal Article
Fiat-Backed Stablecoins and Narrow Banking
Devastated by the misery of millions of people during the Great Depression caused by the collapse of the entire US financial system, a group of economists at the University of Chicago sought to reform the banking sector. The "Chicago plan" suggested a replacement of "fractional-reserve banks" with "full-reserve banks" (also called "narrow banks" and "limited-purpose banks"). Most economists dismiss this idea. However, the rising popularity of stablecoins and the 2025 GENIUS Act in the US introduce this form of banking to the general public. The goal of this note is to analyze the similarities ...
Journal Article
K-shaped Economy or Not? Evidence from a Payments Survey
Using transaction data from a payments survey in the United States, we analyze how consumers across income groups changed their spending between 2021 and 2025. We find that spending by consumers with high household income (fourth and fifth quintiles) grew substantially faster than spending by consumers with low household income (first to third quintiles), a pattern that holds across total spending, grocery spending, and spending on necessities. Both groups saw spending increases, but the gap in growth rates points to a widening of consumption inequality across the income distribution. Rather ...
Journal Article
Digital Currency, Digital Payments, and the 'Last Mile' to the Unbanked
Digital forms of payment are either not accessible or highly costly for unbanked consumers. This is because these forms of payment must be "funded" by some source of money, such as cash or a bank account. That creates the "last-mile" problem for the unbanked. This article examines various solutions for the funding problem that have been proposed in the literature, by regulators, and in bills submitted to Congress.
Journal Article
Payment Card Adoption and Payment Choice
Using data from the 2021 Diary of Consumer Payment Choice, this article investigates two questions: how do consumers without credit or debit cards make payments, and do consumers without these payment cards differ from other consumers?
Journal Article
How US Consumers without Bank Accounts Make Payments
Using data from the 2021 Survey and Diary of Consumer Payment Choice, this article investigates two questions: What payment instruments do consumers without bank accounts adopt? How do these consumers make payments?
Report
U.S. Consumers' Use of Personal Checks: Evidence from a Diary Survey
This paper presents a snapshot of U.S. consumers’ use of paper checks in 2017 and 2018, combining data from the 2017and 2018 Diaries of Consumer Payment Choice.Other data sources have tracked the decline in the use of paper checks since 2000. This report adds to that data by delving into the characteristics of 1,600 individual transactions—in particular, dollar amount, payee, and payer—made by a representative sample of U.S. consumers using checks. Among the findings:•Consumers used checks for 7 percent of transactions overall in 2017 and 2018 and wrote about three checks a ...
Report
How Consumers Get Cash: Evidence from a Diary Survey
Most research on payment instruments focuses on how consumers pay or spend their money using a wide variety of payment instruments including cash. This report focuses on the inverse of the question of spending, that is, how do consumers obtain cash? Data from the 2017 Diary of Consumer Payment Choice shows that, over a three-day period, about 21 percent of survey respondents get cash via various methods, such as getting cash from a family member or friend, using an ATM, getting cash back at retail, visiting a bank teller, etc. We find that consumers mostly get cash from family and friends, ...
Report
Merchant Steering of Consumer Payment Choice: Lessons Learned From Consumer Surveys
Recent policy changes allow merchants to influence consumers' choice of payment instruments by offering price discounts and other incentives. This report describes lessons learned from using consumer survey responses to assess whether merchants tried to influence buyers' choice of payment method. To measure the effects of these recent policy changes, we included questions about merchant steering in pilot versions of a new diary survey of U.S. consumers. Our findings are inconclusive because some respondents interpreted the questions differently from the way we intended. This report aims to ...
Report
How Are U.S. Consumers Using General Purpose Reloadable Prepaid Cards? Are They Being Used as Substitutes for Checking Accounts?
Owners of general purpose reloadable prepaid cards (GPR) who do not have checking accounts comprise 4.8 percent of U.S. adults, according to the 2012 Survey of Consumer Payment Choice. This report explores two important aspects of prepaid card use: Do owners of GPR prepaid cards who lack checking accounts use these cards differently than those who have checking accounts? Are these cards substituting for payment services that have traditionally been provided only via traditional checking accounts?Holding income and demographic factors constant, U.S. consumers without checking accounts (those ...