Paying Uber with Cash∗
Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash∗ Fernando Alvarez† David Argente‡ University of Chicago Pennsylvania State University January 2020 [Link to the latest version] Abstract We estimate the private benefits for Uber riders from using alternative payment methods. We focus on Mexico, where contrary to the US, riders have the option to use cash or credit cards to pay Uber drives. We use three large field experiments involving approximately 400,000 riders as well as several quasi-natural experiments to estimate the loss in private benefits for riders if a ban of cash as a payment method on Uber is implemented. We find that the Uber riders who use cash as means of payment, either sometimes or exclusively, suffer an average loss of approximately 50% of the expendi- ture of trips paid in cash before the ban. Further, the cost from the ban on cash falls disproportionately on lower income households. JEL Classification Numbers: E4, E5 Keywords: Cash, Credit, Money Demand, Consumer Surplus, Means of Payments ∗We want to thank Andy Abel, Manual Amador, George Alessandria, Andy Atkeson, Gadi Barlevy, Mark Bills, Anmol Bhandari, Stephane Bonhomme, Sara Castellanos, Gabriel Chodorow-Reich, Doireann Fitzger- ald, Greg Kaplan, Narayana Kocherlakota, John List, Ellen Mc Grattan, Juanpa Nicolini, Francesco Lippi, Enrique Seira, Rob Shimer, Harald Uhlig, and Venky Venkateswaran for their comments and suggestions. We also want to thank the participants in the seminars at the Federal Reserve Bank of Kansas, the Federal Reserve Bank of Minneapolis, the Federal Reserve Bank of Chicago, the Wharton School at the Univer- sity of Pennsylvania, the University of Rochester, the Applications Workshop at the University of Chicago, Columbia Business School, the Banco de Mexico, the 2019 SED in St.
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