Mobile payments: What’s in it for consumers?
Mobile payments?those initiated on a mobile device such as a cell phone or tablet computer?have received a significant amount of attention recently but still have not been widely adopted in the United States. ; Hayashi examines the barriers that have limited the takeoff of mobile payments in the United States. The article also draws on consumer payments research to assess which attributes of mobile payments might encourage or discourage adoption by U.S. consumers. ; The article concludes that greater convenience and enhanced ability to monitor account balances are likely to encourage consumer ...
Measuring the costs of retail payment methods
In the last two decades, retail payments have experienced a dramatic shift from paper-based payment methods to electronic methods. Accurate cost information for the two types of methods would help central banks decide how hard to push for a complete transition to electronic methods and which methods to promote. ; To obtain such information, a number of central banks have recently conducted comprehensive studies of the costs of retail payment methods. Differences in the results of these studies suggest a need for each central bank to conduct its own study. ; Hayashi and Keeton, however, find ...
Mobile payments : merchants’ perspectives
Developments of QR Code-Based Mobile Payments in East Asia
Initiatives facilitating QR code-based mobile payments in Japan, Singapore, and Hong Kong may address some pain points of banks, nonbanks, and merchants, but whether they address consumers’ depends on factors such as fragmentation and overall digital commerce experience
Network competition and merchant discount fees
Pricing in two-sided markets has not been fully understood yet. Especially, investigations of how competition in these markets affects the price structure or levels are still underway. This paper takes the payment card industry as an example of two-sided markets and examines whether two networks? competition lowers one of the prices in the industry, merchant discount fees, and if it does, how much it lowers equilibrium merchant fees compared with the fee set by a monopoly network. If some cardholders hold only one card and the other cardholders hold two different cards, whether network ...
The economics of payment card fee structure: policy considerations of payment card rewards
This paper considers possible public policies that could improve efficiency and welfare distribution in the U.S. retail payments industry. Mainly, four options, i) encouraging competition; ii) allowing merchants to surcharge; iii) regulating merchant fees; and iv) regulating payment card rewards, are discussed, but each option has advantages and disadvantages. Any single option may not achieve the policymakers' objective; rather, combining several policy options may be required. ; Also issued as a Payments System Research Working Paper.
Pricing and welfare implications of payment card network competition
This paper examines how competition among payment card networks three-party scheme networks and four-party scheme networks affects pricing as well as the welfare of various parties. A competing network has an incentive to provide rewards to its card users. By providing more generous rewards than its rival networks, the network can increase its own card transactions because multihoming cardholders who hold multiple networks cards choose to use its card instead of using its rivals. Although a monopoly network does not have such an incentive, in a monopoly four-party scheme network, competition ...
A guide to the ATM and debit card industry - 2006 update
It has been three years since we published A Guide to the ATM and Debit Card Industry. Those three years represent a very dynamic time in the industry with a number of important developments. Some trends and patterns have persisted or accelerated, while others have peaked or reversed. Still others have emerged for the first time. The purpose of this 2006 Update is to document these trends and patterns by updating the data we presented in the original book and to discuss their implications for the current and future state of the industry. ; The most important development is that the two ...
Faster payments in the United States: how can private sector systems achieve public policy goals?
Consumers and businesses are increasingly expecting faster payments. While many countries have already developed or are in process of developing faster payments, the availability of these payments is fragmented in the United States. The recently released paper by the Federal Reserve encourages private sector participants to provide faster payment services. However, private-sector faster payments systems will face significant challenges in achieving public policy goals of ubiquity, safety, and efficiency unless system governance represents broad public interests. One way to better align ...
Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in the United States and Canada
Using data from the United States and Canada, we quantify consumers’ net pecuniary cost of using cash, credit cards, and debit cards for purchases across income cohorts. The net cost includes fees paid to financial institutions, rewards received from credit or debit card issuers, and the higher retail prices passed on to consumers to cover merchants’ payment processing costs. Even though credit cards are more expensive for merchants to accept compared with other payment methods, merchants typically do not differentiate prices at checkout but instead pass through their costs to all ...