Determinants of non-cash payments in the Eurozone: Culture matters

Retail shops incentive contactless transactions during the current COVID-19 pandemic. Customers are asked to pay cashless to prevent contagion. Traditionally, there are large differences in the extent and acceptance of non-cash payments among nations. This paper analyzes empirically the determinants of the payment behavior in the member states of the Eurozone asking how to explain these traditional differences in non-cash payment preferences. Our basic hypothesis is that culture makes the difference across nations matter.

The paper adds to the existing literature not only by focusing on the determinants of preferences for non-cash payments from a macroeconomic perspective but also by analyzing cultural factors. The payment data is gathered with the European Central Bank (ECB) and Eurostat. We examine the impact of culture on payment preferences by the means of the Hofstede indicators. Our empirical results show the importance of cultural issues to understand the acceptance of non-cash payments. In particular, the results suggest that a higher degree of uncertainty avoidance goes in line with more non-cash payments.