In a previous post I wrote about the costs of accepting credit cards. It is important to note that merchants derive lots of benefits from card acceptance, including and lower credit risk (at least compared to checks), easier bookkeeping and currency conversion, lower theft risk (less cash in the till), and improved checkout speed. The most important benefit, though, is increased sales. (See an example of this claim here.) But is that right? Do consumers really purchase more because they are purchasing with credit cards? Put more technically, does price elasticity depend on payment method?
