Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash

Last registered on November 23, 2020
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Pre-Trial

Trial Information

General Information

Title
Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash
RCT ID
AEARCTR-0006797
Initial registration date
November 21, 2020

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 23, 2020, 10:33 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Mexico
Region

Primary Investigator

Name
David Argente
Affiliation
Pennsylvania State University
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Other Primary Investigator(s)

PI Name
Fernando Alvarez
PI Affiliation
University of Chicago
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Additional Trial Information

Status
Completed
Start date
2018-08-13
End date
2018-10-23
Keywords
Other
Additional Keywords
Money demand, Payment methods
JEL code(s)
E41
Secondary IDs
Abstract
We estimate the private benefits for Uber riders from using alternative payment methods. We focus on Mexico where riders have the option to use cash or credit cards to pay for rides. We use three field experiments involving approximately 400,000 riders to estimate the loss of private benefits for riders if a ban on cash payments is implemented. We find that Uber riders, using cash as means of payment either sometimes or exclusively, suffer an average loss of approximately 50% of their expenditures on trips paid in cash before the ban.
External Link(s)

Registration Citation

Citation
Alvarez, Fernando and David Argente. 2020. "Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash." AEA RCT Registry. November 23. https://doi.org/10.1257/rct.6797-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
Three randomized control experiments conducted in the State of Mexico. First, we estimate the elasticity of substitution between paying for trips in cash versus credit by using price variation in discounts for trips paid in cash or discounts for trips paid with credit. Second, we use discounts given regardless of the means of payments to estimate the price elasticity for Uber. And, lastly, we give small rewards (credit for future trips on their Uber account) if riders register a credit card in the application to estimate the fixed cost of registering a card.
Intervention Start Date
2018-08-13
Intervention End Date
2018-10-23

Primary Outcomes

Primary Outcomes (end points)
Estimates of the elasticity of demand, elasticity of substitution across payment methods, and fixed cost of registering a card in the application.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Experiment 1: We have six treatment groups, each composed of approximately 11 thousand riders and a control group of 90 thousand riders. Riders in the treatment groups received the following promotions: i) 10% off if the trip is paid with cash, ii) 10% off if the trip is paid with card, iii) 10% off regardless of the payment method, iv) 20% off if the trip is paid in cash, v) 20% off if the trip is paid with card, and vi) 20% off regardless of the payment method.

Experiment 2: We have four treatment groups each composed of approximately 20 thousand riders and a control group of 56 thousand riders. We have 4 treatment groups each getting 10%, 15%, 20%, and 25% off of all the trips taken during the week of the experiment.

Experiment 3: We offered rewards if the users registered their cards into the application, without imposing restrictions on whether they should pay their subsequent trips using cash or credit. The treatment groups received rewards of 100, 200, or 300 pesos (5.2, 10.5 and 15.7 USD) that are approximately an average of 3, 6, and 9 times their average weekly fares (or approximately 1, 2 and 3 average trips). The experiment had two treatments for each reward with two different horizons. The first lasted only one week and the second lasted 6 weeks.
Experimental Design Details
Randomization Method
Randomization done in office by a computer
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
NA
Sample size: planned number of observations
400,000 Uber riders
Sample size (or number of clusters) by treatment arms
Experiment 1: 120,000 treatment, 90,000 control.
Experiment 2: 80,000 treatment, 56,000 control.
Experiment 3: 120,000 treatment, 40,000 control.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
October 23, 2018, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
October 23, 2018, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
400,000 riders
Final Sample Size (or Number of Clusters) by Treatment Arms
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Abstract
We estimate the private benefits for Uber riders from using alternative payment methods. We focus on Mexico where riders have the option to use cash or credit cards to pay for rides. We use three field experiments involving approximately 400,000 riders to estimate the loss of private benefits for riders if a ban on cash payments is implemented. We find that Uber riders, using cash as means of payment either sometimes or exclusively, suffer an average loss of approximately 50% of their expenditures on trips paid in cash before the ban.
Citation
Alvarez, Fernando, and David Argente. "Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash." University of Chicago, 2020.
URL
https://sites.google.com/site/dargenteamaya/AA_Experimental_with_Appendix.pdf?attredirects=0

Reports & Other Materials