Payment Card Rewards Programs and Consumer Payment Choice
The Payments System Research department of the Federal Reserve Bank of Kansas City has published a new working paper titled "Payment Card Rewards Programs and Consumer Payment Choice" by Andrew Ching and Fumiko Hayashi. The paper "seeks to analyze the effects of payment card rewards programs on consumer payment choice by using consumer survey data."
The results suggest that (i) consumers with credit card rewards use credit cards much more exclusively than those without credit card rewards; (ii) even among those who carry a credit card balance, consumers with credit card rewards use a credit card more often than those without rewards; (iii) among consumers who receive credit card rewards, those who receive credit card rewards as well as debit card rewards tend to use debit cards more often than those who receive credit card rewards only; and (iv) reward card transactions seem to replace not only paper-based transactions but also non-reward card transactions."
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