Are There Social Spillovers in Consumers’ Security Assessments of Payment Instruments? Are There Social Spillovers in Consumers’ Security Assessments of Payment Instruments?

By Charles Kahn, José Manuel Liñares-Zegarra, and Joanna Stavins

Even though security of payments has long been identified as an important aspect of the consumer payment experience, recent literature fails to appropriately assess the extent of social spillovers among payment users. Shortcomings in the safety of particular payments instruments, whether real or perceived, could compromise the smooth operation of entire retail payment systems and make payment users shift toward less-efficient means of payment. A deeper understanding of the determinants of safety perceptions is fundamental for helping policymakers and central bankers preserve consumers' confidence in payment instruments. The authors test for the existence and importance of such spillovers by analyzing whether social influence affects consumers' perceptions of the security of payment instruments.

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