<abstract xmlns="http://www.w3.org/1999/xhtml"><p>We examine the preferences of respondents for six types of payment instruments, namely cash, debit and credit cards, card and server-based electronic money, and internet or mobile banking. By applying a nested logit model to 500 household data covering six provincial capitals in Indonesia, we find that the decision to choose payment instruments is made sequentially. Socio-economic characteristics, including education, age, income, and transaction objectives or functionality have a significant effect on the probability of using non-cash electronic payment instruments. We find a substitution pattern between payment instruments, not only between cash and non-cash instruments but also between non-cash instruments. In light of these findings, appropriate payment system policies are in order to hasten the use of non-cash payment.</p></abstract>

We examine the preferences of respondents for six types of payment instruments, namely cash, debit and credit cards, card and server-based electronic money, and internet or mobile banking. By applying a nested logit model to 500 household data covering six provincial capitals in Indonesia, we find that the decision to choose payment instruments is made sequentially. Socio-economic characteristics, including education, age, income, and transaction objectives or functionality have a significant effect on the probability of using non-cash electronic payment instruments. We find a substitution pattern between payment instruments, not only between cash and non-cash instruments but also between non-cash instruments. In light of these findings, appropriate payment system policies are in order to hasten the use of non-cash payment.

Indonesian Household Payment Choice: A Nested Logit Analysis

Department of Payment System Policy, Bank

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 Public License.

{"article-title":"Indonesian Household Payment Choice: A Nested Logit Analysis"}

We examine the preferences of respondents for six types of payment instruments, namely cash, debit and credit cards, card and server-based electronic money,...

Indonesian Household Payment Choice: A Nested Logit Analysis

Published Online: Jul 16, 2020

Page range: 291 - 313

DOI: https://doi.org/10.2478/jcbtp-2020-0032

Keywords
Payment Preferences, Payment Instruments, Substitution between Payment Instruments

© 2020 Nur Annisa Hasniawati et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Indonesian Household Payment Choice: A Nested Logit Analysis

Published Online: Jul 16, 2020

Page range: 291 - 313

DOI: https://doi.org/10.2478/jcbtp-2020-0032

KeywordsPayment Preferences, Payment Instruments, Substitution between Payment Instruments

© 2020 Nur Annisa Hasniawati et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 Public License.

Keywords
Payment Preferences, Payment Instruments, Substitution between Payment Instruments