Oz Shy
Working Paper 2019-02b
February 2019 (revised August 2019 and March 2020)

Download the full text of this paper Adobe PDF file format

I show how currency denomination and the ATM influence consumers' choice of whether to pay cash for in-person purchases. I identify transaction values above which consumers switch from paying cash to paying with cards. The sharpest changes in the share of cash payments occur at $20 and $40, which coincide with the observation that most ATMs in the United States dispense multiples of $20 bills. Other thresholds prevail at multiples of $5 and $10. The above thresholds generate asymmetries in consumer behavior where the share of cash payments increases for payments values just below the thresholds and decreases just above them.

JEL classification: D9, E42

Key words: currency denomination, automated teller machines, ATM, cash payments, consumer payment choice, payment methods, in-person purchases


The author thanks seminar participants at the Federal Reserve of Atlanta for valuable comments on earlier drafts. The views expressed here are those of the author and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the author’s responsibility.
Please address questions regarding content to Oz Shy, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta, GA 30309-4470, ozshy@ozshy.com.
Subscribe to receive e-mail notifications about new papers.