It All Depends on the Intensity of Use

The increase of the limit in Switzerland in April 2020 was in line with the approach in other OECD countries. It remains to be seen whether the results of the SNB study are transferable. However, given that debit cards are also the most widely used payment method in many other European countries, the method of analysis used in the Swiss study may also be suitable for the situation in other countries.

The analysis is based on anonymized data from more than three billion transactions in the period between 2019 and 2021. To overcome the empirical challenges, the team of authors used data filters. It compares the payment behavior of the same consumers making purchases from the same merchants during the same time period. Concerns about changes in the availability of payment technology – i.e., the ability to make contactless payments – are addressed by limiting the sample to merchants and cards or cardholders who had access to contactless payments as of 2019. In this way, the consumption structure remains unchanged. The final dataset includes approximately 20 million transactions, just over 400,000 different payment cards, and nearly 18,000 merchants.

The results of the study suggest that policymakers should consider the role of financial intermediaries and usage rules when evaluating payment innovations such as instant payments or digital central bank currencies. In particular, the SNB’s analysis suggests that an amount limit could influence the intensity of consumer use of individual payment technologies.

Gabriel Juri
SIX