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What Does it Cost to Make a Payment?

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Author Info

  • Humphrey David

    ()
    (Florida State University)

  • Willesson Magnus

    (University of Gothenburg)

  • Lindblom Ted

    (University of Gothenburg)

  • Bergendahl Göran

    (University of Gothenburg)

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    Abstract

    We survey the limited data that exists concerning the cost of making/receiving a payment by banks, retailers, and other parties to a transaction. Since an electronic payment costs between one-third and onehalf that of a paper-based instrument, a country may save 1% of its GDP annually as it shifts from a fully paper-based to a fully electronic-based payment system. Some gains have already been realized. Additional analysis indicates that bank costs of making a payment may have fallen by 45% in Europe as the share of electronic transactions in 12 countries rose from .43 to .79 over 1987-1999.

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    File URL: http://www.degruyter.com/view/j/rne.2003.2.2/rne.2003.2.2.1024/rne.2003.2.2.1024.xml?format=INT
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    Bibliographic Info

    Article provided by De Gruyter in its journal Review of Network Economics.

    Volume (Year): 2 (2003)
    Issue (Month): 2 (June)
    Pages: 1-16

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    Handle: RePEc:bpj:rneart:v:2:y:2003:i:2:n:7

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    Web page: http://www.degruyter.com

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    Web: http://www.degruyter.com/view/j/rne

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    Cited by:
    1. Ricardo Bebczuk & Tamara Burdisso & Máximo Sangiácomo, 2013. "Credit vs. Payment Services: Financial Development and Economic Activity Revisited," Department of Economics, Working Papers 097, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
    2. Monnet, Cyril & Roberds, William, 2008. "Optimal pricing of payment services," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1428-1440, November.
    3. Borzekowski, Ron & Kiser, Elizabeth K., 2008. "The choice at the checkout: Quantifying demand across payment instruments," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 889-902, July.
    4. Carbó-Valverde, Santiago & Liñares-Zegarra, José M., 2009. "How effective are rewards programs in promoting payment card usage? Empirical evidence," Working Paper Series 1141, European Central Bank.
    5. Kahn, Charles M. & Roberds, William, 2009. "Why pay? An introduction to payments economics," Journal of Financial Intermediation, Elsevier, vol. 18(1), pages 1-23, January.
    6. Cyril Monnet & William Roberds, 2007. "Optimal pricing of payment services when cash is an alternative," Working Papers 07-26, Federal Reserve Bank of Philadelphia.
    7. Helmi Hamdi, 2007. "Some Ambiguities Concerning the Development of Electronic Money," Financial Theory and Practice, Institute of Public Finance, vol. 31(3), pages 293-307.
    8. Humphrey, David & Willesson, Magnus & Bergendahl, Goran & Lindblom, Ted, 2006. "Benefits from a changing payment technology in European banking," Journal of Banking & Finance, Elsevier, vol. 30(6), pages 1631-1652, June.
    9. Cyril Monnet & William Roberds, 2006. "Credit and the no-surcharge rule," Working Paper 2006-25, Federal Reserve Bank of Atlanta.
    10. Hans Brits & Carlo Winder, 2005. "Payments are no free lunch," DNB Occasional Studies 302, Netherlands Central Bank, Research Department.

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