ATM withdrawals, debit card transactions at the point of sale and the demand for currency

  1. Santiago Carbó-Valverde 1
  2. Francisco Rodríguez-Fernández 2
  1. 1 Bangor Business School and Funcas
  2. 2 Universidad de Granada
    info

    Universidad de Granada

    Granada, España

    ROR https://ror.org/04njjy449

Journal:
SERIEs : Journal of the Spanish Economic Association

ISSN: 1869-4195

Year of publication: 2014

Volume: 5

Issue: 4

Pages: 399-417

Type: Article

DOI: 10.1007/S13209-014-0107-9 DIALNET GOOGLE SCHOLAR lock_openOpen access editor

More publications in: SERIEs : Journal of the Spanish Economic Association

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Abstract

Debit cards are employed for cash withdrawals at automated teller machines (ATMs) and for purchasing transactions at point-of-sale (POS). In this paper, we explore, for the first time to our knowledge, the determinants of debit card transaction volumes at ATM and POS, the relationship between these two alternative usages of cards and its impact on the demand for currency. We employ a unique database that considers the two-sided nature of debit cards to explore these issues. The results suggest that the intensity of the use of ATMs and POS have a large economic impact one on another. We also find a net negative effect of transactions with debit cards on the demand for currency since the positive impact of ATM usage is lower in absolute terms than the negative effect of POS volumes.

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Funding information

Financial support from the “Ayuda a la investigación en Ciencias Sociales” of the Fundación BBVA is acknowledged and appreciated. We also thank financial support from the project of the Spanish Ministry of Science and Innovation ECO2011-27954. We thank an anonymous referee for the valuable comments made on this paper. We also thank our discussant Bijorn Imbierowicz and other participants in the 2008 Australasian Finance and Banking Conference for the comments on an earlier version of the paper entitled “ATM vs. POS terminals: a horse race?”. We also thank comments from our discussant John Krainer and from Bob Chakravorti, Jean-Charles Rochet, James McAndrews, Charles Khan, Gautam Gowrisankaran and other participants in the 2009 American Economic Association Meeting held in San Francisco in January 2009. Additionally, comments from our discussant, Martin Goetz, Ahmet Aysan, Marianne Verdier, Jozsef Molnar and other participants in the 7th International Industrial Organization Conference held in Boston in April 2009 are appreciated.

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