Abstracts Economics

Are Peer-to-peer Payment Methods a Boon for Charity?

by Aazum Ahmad Shaikh

Peer-to-peer forms of payment, such as Venmo (established in 2009), are convenient methods of transferring funds directly between two parties. This study uses an on-campus fundraising field experiment to examine the impact of payment method on charitable giving. The four treatments in the experiment are whether respondents can donate cash, use their debit card, use their Venmo account without a balance, or use their Venmo account with a balance. Like previous studies, we find a "plastic effect" in that donations are larger when contributors are asked to use their debit card instead of cash. In addition, we find evidence of a "peer-to-peer effect" as well in that those participants donating using the balance in their Venmo account contribute more than those using cash. Our study suggests that people may fail to properly account for peer-to-peer balances in their mental accounting and, as a result, are more willing to donate money from these accounts than they would if they held cash.