| Abstract: |
This paper contributes to understanding consumers' retail payment preferences
and digitalisation in personal finances. We focus on the acceptance of
cashless payments in everyday situations and the use of mobile banking apps in
the euro area, where the payment services market has changed significantly in
recent years. In particular, we study app-based tools for day-to-day (offline)
purchases that involve small amounts of money as well as digital tools for
managing personal finances. By looking at factors associated with using
non-cash payment methods, and app-based financial services solutions, we shed
light on the topic of financial inclusion in payment services that concern
consumers’ everyday choices. Using granular microdata from the European
Central Bank's Consumer Expectations Survey, we find that most people prefer
to use only one payment instrument. After the COVID-19 pandemic, it has mostly
been cash and contactless cards. The use of cash is partly due to limited
perceived acceptance of non-cash payments by merchants. We also find
substantial cross-country heterogeneity and highlight the prominent role of
demographic factors in choosing non-cash payment options and app-based tools
when managing personal finances. While mobile banking is already popular
amongst euro area consumers, the use of smart payment methods remains very
limited. Our findings suggest that financial service providers should
recognize the growing preference of the younger generations for alternative
payment methods. Creating awareness among consumers might also lead to
positive feedback effects by reducing consumers’ reliance on cash through
higher perceived availability of non-cash payment options. JEL Classification:
C13, D12, E42, O33 |