Payments Evolution from Paper to Electronic Payments by Merchant Type
Although US consumers have been moving away from making payments with cash and checks and toward using cards and electronic methods for many years, maybe even decades, the majority still hold checks, and almost every consumer continues to use cash. This transition from paper payment instruments to cards and electronic payments has been so gradual because, among other reasons, consumers and merchants are both heterogenous and no single payment method serves all consumers or all types of merchants. The authors use data from the Diary of Consumer Payment Choice, a detailed diary of consumer payment behavior collected from a representative sample of US consumers, to analyze changes in payment-method use from 2017 to 2020 across different merchant types. The sample includes data collected before and during the COVID-19 pandemic, enabling the authors to analyze its effect on the use of different payment instruments.