Choosing Between Innovative and Traditional Payment Systems: An Empirical Analysis of European Trends

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Silvio John Camilleri
Christabelle Agius

Abstract

The current variety of payment methods offers faster settlements and reasonable security, however payment innovations may be met with inertia or resistance.  This study addresses the characteristics which may be associated with the adoption of novel payment systems and salient user trends in this respect.  We investigate whether the reliance on traditional payment methods across European countries is related to socio-economic aspects, and also delve into the payment habits at the individual level.  Results from an econometric model suggest that financial market development and education-related factors are negatively related to the use of traditional payment instruments.  When considering consumer payment habits and awareness about novel facilities, particular differences across generations emerged.  Cash and debit cards are most widely used and it seems that such choices are related to perceived convenience rather than due to aversion towards novel systems.

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