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It is well known that certain payment methods, such as credit and debit cards, can increase consumer spending. For many low income consumers, who cannot typically increase their spend, the relationship between payment method and spending has not been empirically examined. Using grocery store sales data, this research takes advantage of the introduction of a geographically-targeted Cashless Debit Card for welfare recipients in Australia to investigate the impact of payment methods on spending behaviour.

Recipients of government welfare and support payments were automatically enrolled into the Cashless Debit Card program, with 80% of their support payments deposited onto the card. The card prevented the withdrawal of cash money. The sales data from the local grocery store from the region where this program was implemented were obtained, as well as the …