Preferences for Cash vs. Card Payments: An Analysis using German Household Scanner Data

Authors: Calogero Brancatelli (Goethe University)

Title: Preferences for Cash vs. Card Payments: An Analysis using German Household Scanner Data

Abstract: The preference of German households for cash payments is well known. I document this preference using payment information from individual transactions of a panel of up to 18,000 households, covering the years 2009 till 2015. Accounting notably for household fixed effects, I show that over these seven years preferences for card payments have hardly increased, despite the fact that virtually all German household have access to a debit card (the girocard), which comes free of charge with their current account and which is accepted by virtually all retailers of fast-moving consumer goods (i.e., grocery retailers and drugstores in my household panel). However, zooming in on transactions with high denomination, I also document pronounced differences in household preferences, which I show to be stable over time. The particular institutional environment, i.e., the identical access of all households to girocard payments, allows me to rule out common explanations for such heterogeneity.