Study Overview
Debit cards reduce the travel distance to access bank accounts and can increase financial inclusion. We show that in Mexico, cash transfer beneficiaries who already received their transfers in bank accounts and subsequently received debit cards reduce their median distance to access the account from 4.8 to 1.3 kilometers and report being less likely to forgo important activities (childcare, work) to withdraw their transfer. Using account level data, we find a strong negative correlation between the reduction in travel distance and financial activity: beneficiaries facing the largest reductions in distance increase both their number of withdrawals and their savings balances.
Study Results
Debit cards lower transaction costs by reducing the distance to access bank accounts. We find that account holders respond to this reduction in transaction costs by changing the method of transport they use to access their account, with a decrease in transportation by bus and an increase in walking. Furthermore, we find a decrease in the proportion who forgo important activities—such as work or childcare—to withdraw their transfer. The reduction in indirect transaction costs could also improve financial inclusion: we observe that use of the account and savings are correlated with the change in travel distance to access the account.
Intervention: Conditional cash transfer program with debit cards