How Consumers Pay: Adoption and Use of Payments

Scott Schuh, Joanna Stavins


Using data from a nationally representative survey of U.S. consumers, we estimate Heckman two-stage regressions on the adoption and use of seven different payment instruments. We find that the characteristics of payment instruments are important in determining consumer payment behavior, even when controlling for demographic and financial attributes: difficulty to setup and keep records are especially important in explaining adoption of payments, while ease of use, cost and security are important in explaining which methods consumers use for transactions. For the first time, the number of payment methods adopted by consumers conditional on having access to a bank account is estimated, as the unbanked consumers’ payment choices are much more limited than those of consumers with bank accounts. Because cost is found to significantly affect payment use, a potential increase in the cost of credit or debit cards following recent regulatory changes affecting those payment methods may lead to a reduction in U.S. consumers’ reliance on payment cards for transactions.

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Accounting and Finance Research
ISSN 1927-5986 (Print)   ISSN 1927-5994 (Online) Email:

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