Income and banking access in the USA: The effect on bill payment choice

Abstract

Consumer payment methods are determined by a number of factors, including the type of bill, the value of the bill, whether the bill is to be paid online or automatically, and — by no means least of all — the demographic and income profile of the individual making the payment. As this paper argues, the convenience and speed provided by automatic and online payments do not benefit all US consumers equally. Unbanked consumers lack access to most payment methods and hence use cash or prepaid cards to pay their bills. Low-income consumers are more likely to pay in person, use significantly more cash, and are less likely to set up automated or online bill payments, regardless of whether they have a bank account.