Choosing how to pay: The influence of foreign backgrounds

Is having a foreign background a relevant factor in choosing between payment instruments in consumer point-of-sale transactions after migration? We analyze this question using a unique diary survey in which both participants with a Dutch and a foreign background documented their daily purchases. We present several pieces of evidence suggesting that foreign backgrounds still influence the choice between payment instruments after migration to the Netherlands. For instance, we find that first-generation migrants from a number of countries that can be seen as cash-oriented are more likely to use cash in the Netherlands. At the same time, second-generation migrants have similar payment habits as individuals with a Dutch background. This finding suggests that payment behavior is not passed on between generations, but affected by host country payment habits. Finally, we suggest that, in this context, special information campaigns to increase debit card usage will not have clear net social benefits.

► Foreign backgrounds influence choice between payment instruments after migration. ► Evidence based on diary survey among 2258 Dutch residents. ► Consumers originating from cash-oriented countries more likely to use cash. ► Differences in payment behavior only present for first-generation migrants. ► Uncertain that targeted information campaign on debit cards will be cost effective.