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Why invest in payment innovations? Author info | Abstract | Publisher info | Download info | Related research | Statistics Sujit Chakravorti
Emery Kobor
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In this paper, we provide a framework to study the creation and adoption of innovations by payment providers and processors. We identify several motivating factors for banks and nonbanks to invest in payment innovations. In addition, we discuss the evolutionary process of payment innovations from inception to commoditization recognizing that innovations differ in the time necessary to evolve from proprietary technology to commodization and some may never evolve completely. Finally, we consider a snapshot of payment innovations at different stages of development. We compare proprietary versus nonproprietary innovations and their profitability. Our main conclusions are the following. Payment innovators are more likely to be successful when they target niche markets. Banks often use innovations to add value to a bundled product offering. Payment networks and processors leverage their connectivity when creating or adopting innovations.
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Article provided by Federal Reserve Bank of Chicago in its journal Emerging Issues .
Volume (Year): (2003)
Issue (Month): Jun ()
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Keywords: Payment systems ; Clearinghouses (Banking) ; References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.:
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Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Tara Rice, 2003.
"The importance of payments-driven revenues to franchise value and in estimating bank performance ,"
Emerging Issues ,
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[Downloadable!]
Sujit Chakravorti & Roberto Roson, 2004.
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Working Paper Series
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[Downloadable!]
Other versions: Tara Rice & Kristin Stanton, 2003.
"Estimating the volume of payments-driven revenues ,"
Emerging Issues ,
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[Downloadable!]
Cathy Lemieux, 2003.
"Retail payments innovations and the banking industry ,"
Emerging Issues ,
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[Downloadable!]
Catharine Lemieux, 2003.
"Network vulnerabilities and risks in the retail payment system ,"
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[Downloadable!]
Sujit Chakravorti & Victor Lubasi, 2006.
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Economic Perspectives ,
Federal Reserve Bank of Chicago, issue Q II, pages 29-43.
[Downloadable!]
Paul Kellogg, 2003.
"Evolving operational risk management for retail payments ,"
Emerging Issues ,
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[Downloadable!]
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