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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 payment methods, and card reward status. The results based on a single-year survey as well as on panel data suggest that there is a significant negative relationship between debit card use and credit score even after controlling for various characteristics. We supplement the analysis with evidence from Equifax data. The results indicate that an increase in consumers' cost of debit cards?in response to regulatory changes, for example?would have an adverse effect on low-credit-score consumers (typically those with lower incomes and less education). ; We then investigate what credit score implies. If credit score significantly influences consumer access to credit cards, credit limits, or the cost of credit cards, then the negative relationship likely results from supply-side constraints. If a lower credit score is associated with differences in underlying preferences, then the negative relationship is likely due to demand-side effects. Preliminary evidence strongly suggests that supply-side factors play an important role in the cost of credit and in access to credit.
AUTHORS: Stavins, Joanna; Hayashi, Fumiko
DATE: 2012

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 adoption of mobile payments for in-store purchases, while initial lack of merchant acceptance may discourage adoption. The effects on consumer adoption of cost, security, and targeted marketing are less clear and will depend on which mobile payment technology is used and how it is implemented.
AUTHORS: Hayashi, Fumiko
DATE: 2012-01

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 the payments system will rise or fall. ; Much will depend on what steps are taken by banks, networks, merchants and consumers, as all parties continue adapting to the new regulatory environment. Policymakers will need to monitor developments closely and assess their impact on the competition among networks for merchants, on consumer welfare and on payments system efficiency.
AUTHORS: Hayashi, Fumiko
DATE: 2013-01

Journal Article
Access to Electronic Payments Systems by Unbanked Consumers
Fumiko Hayashi identifies electronic payment products that can mitigate unbanked consumers? problems with the banking system.
AUTHORS: Hayashi, Fumiko
DATE: 2016-07

Journal Article
Payment Card Fraud Rates in the United States Relative to Other Countries since Migrating to Chip Cards
The United States has lagged somewhat behind other countries in implementing steps to mitigate payment card fraud, such as chip card technology and personal identification numbers. Small delays in implementing fraud mitigation strategies could translate to large fraud losses relative to other countries. Although comparing fraud rates across countries can be challenging, Fumiko Hayashi examines payment card fraud rates in the United States along with three countries with the best available data?Australia, France, and the United Kingdom?and finds that the United States has the highest overall fraud rate. Even after migrating to chip card technology, the United States has a significantly higher in-person fraud rate than all three countries but a lower remote fraud rate than Australia and France. Fewer safeguards and differences in prevalent types of transactions may help explain this.
AUTHORS: Hayashi, Fumiko
DATE: 2019-10

Journal Article
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 that central banks wishing to conduct their own cost studies need not start from scratch. Central banks can learn many lessons from previous cost studies about how to measure and interpret costs and what kind of information to collect.
AUTHORS: Hayashi, Fumiko; Keeton, William R.
DATE: 2012-04

Working Paper
Technology adoption and consumer payments : evidence from survey data
Consumers pay for hundreds of goods and services each year, but across households and across goods, consumers do not choose to pay the same way. This paper posits that these differences depend in part on consumers' propensity to adopt new technologies, and depend in part on the nature of the transaction. In order to test these hypotheses, this paper offers comparisons of payment instrument use at the point of sale and for bill payment from a sample of consumers surveyed in 2001, drawn primarily from users of the Internet. The results indicate that consumers who use technology or computers are more likely to use electronic forms of payment. In addition, use of direct deposit is a significant predictor of use of electronic payments. Furthermore, payment choice depends on the characteristics of the transaction. By analyzing these hypotheses together, consumer payment choice may lend insight into consumer technology adoption behavior more generally.
AUTHORS: Hayashi, Fumiko; Klee, Elizabeth C.
DATE: 2002

Working Paper
Payment card rewards programs and consumer payment choice
Card payments have been growing very rapidly. To continue the growth, payment card networks keep adding new merchants and card issuers try to stimulate their existing customers? card usage by providing rewards. This paper seeks to analyze the effects of payment card rewards programs on consumer payment choice, by using consumer survey data. Specifically, we examine whether credit/debit reward receivers use credit/debit cards relatively more often than other consumers, if so how much more often, and which payment methods are replaced by reward card payments. Our results suggest that (i) consumers with credit card rewards use credit cards much more exclusively than those without credit card rewards; (ii) even among those who carry a credit card balance, consumers with credit card rewards use a credit card more often than those without rewards; (iii) among consumers who receive credit card rewards, those who receive credit card rewards as well as debit card rewards tend to use debit cards more often than those who receive credit card rewards only; and (iv) reward card transactions seem to replace not only paper-based transactions but also non-reward card transactions.
AUTHORS: Ching, Andrew; Hayashi, Fumiko
DATE: 2006

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 among card issuers likely makes issuers provide rewards. Due to rewards, the merchant fees under competition can be higher than the merchant fees set by a monopoly network, unless the majority of cardholders are multihoming. Generally, cardholding consumers are better off under network competition. In contrast, non-cardholding consumers are better off only when network competition reduces merchant fees lower than those under monopoly. The results suggest that policies that simply encourage network competition will likely increase cardholder rewards but will not necessarily lower merchant fees in the U.S. payment card market. Several empirical indicators may possibly tell which direction the U.S. payments system needs to go.
AUTHORS: Hayashi, Fumiko
DATE: 2006

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 that wants all merchants in a given industry to accept cards sets a lower merchant fee initially and then gradually increases it to the highest possible level, which may be higher than the sum of the merchant?s transactional benefit and the merchant?s initial margin without cards. Such merchant fees potentially create inequality between cardholders and non-cardholders.
AUTHORS: Hayashi, Fumiko
DATE: 2004

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