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Author:Hayashi, Fumiko 

Discussion Paper
Effects of credit scores on consumer payment choice

This paper investigates the effects of credit scores on consumer payment behavior, especially on debit and credit card use. Anecdotally, a negative relationship between debit card use and credit score has been reported; however, it is not clear whether that relationship is related to other factors, such as education or income, or whether it is a mere correlation. We use a new consumer survey dataset to examine whether this negative relationship holds after controlling for various consumer characteristics, including demographic and financial characteristics, consumers' perceptions toward ...
Public Policy Discussion Paper , Paper 12-1

Working Paper
Faster Payments : Market Structure and Policy Considerations

The U.S. payments industry is in the process of developing ubiquitous, safe, faster electronic solutions for making a broad variety of business and personal payments. How this market for faster payments will evolve will be shaped by a range of economic forces, such as economies of scale and scope, network effects, switching costs, and product differentiation. Emerging technologies could alter these forces and lead to new organizational arrangements or market structures that are different from those in legacy payment markets to date. In light of this uncertainty, this paper examines three ...
Finance and Economics Discussion Series , Paper 2017-100

Journal Article
The new debit card regulations: effects on merchants, consumers, and payments system efficiency

Public authorities recently intervened in the U.S. payment card industry to address tensions over the growing fees charged to merchants for processing debit card transactions. In this second article of Hayashi's two-part series, the author reviews how regulatory changes have affected merchants, consumers and the overall efficiency of the nation's payments system. ; She finds that competition among card networks for merchants has risen, and the fees imposed on merchants have declined, on average. However, it is too soon to know whether consumers will reap benefit and whether the efficiency of ...
Economic Review , Volume 98 , Issue Q I , Pages 89-118

Working Paper
A puzzle of card payment pricing : why are merchants still accepting card payments?

This paper presents models that explain why merchants accept payment cards even when the fees they face exceed the transactional benefits they receive from a card transaction. Such merchant behaviors can be explained by competition among merchants and/or the effectiveness of the merchant?s card acceptance in shifting cardholders? demand for goods upward. The prevalent assumption used in payment card literature?merchants accept cards only when their transactional benefits are higher than the fees they pay?holds only for a monopoly merchant who faces an inelastic consumer demand. A card network ...
Payments System Research Working Paper , Paper PSR WP 04-02

Journal Article
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 ...
Economic Review , Volume 97 , Issue Q I , Pages 35-66

Working Paper
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 merchant cost of accepting payments that is passed on to consumers as higher retail prices. 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 ...
Working Papers , Paper 20-13

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 ...
Payments System Research Working Paper , Paper PSR WP 06-03

Briefing
Digital, Financial, and Health Insurance Exclusion Experienced by Low-Income Households

Many low-income households are excluded from essential services such as home internet access, bank accounts, and health insurance coverage. We examine to what degree low-income households experience digital, financial, and health insurance exclusion and assess whether education and race are correlated with exclusion. We find that more than 10 percent of low-income households experienced multiple types of exclusion in 2019, with more pronounced results for households with lower educational attainment.
Payments System Research Briefing , Issue July 7, 2021 , Pages 9

Working Paper
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 ...
Research Working Paper , Paper RWP 20-18

Briefing
Interchange fees and network rules: a shift from antitrust litigation to regulatory measures in various countries

This article summarizes the global trends in public authority involvement in payment card pricing and rules, examines reasons for the shift to regulatory measures, and considers potential implications for the United States.
Payments System Research Briefing , Issue Oct , Pages 1-5

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