The Effects of Mobile Payments on Discretionary Spending in the United States

Abstract

This paper examines the effect of mobile payments on consumer discretionary spending in the United States. It builds onto existing literature which has addressed payment method usage in individual categories, switching costs of new payment methods, and its impact on discretionary expenditures. In this paper, additional quantitative analysis strives to find a statistically significant relationship between mobile payments and spending so that policymakers and banks make the best recommendations to their constituents. To study this, the discussion relies on four panel series linear models and one fixed effects model. The results confirm that mobile payments increase discretionary spending in food and accommodation services. The magnitude of the effect increases for small transaction sizes and decreases for large transaction sizes.