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Electronic Payments Profitability Extent Model

Author

Listed:
  • Rudolf Vohnout
  • Zora Říhová
  • Iva Dostálková

Abstract

Cashless payments are recent phenomena, which even increased with the introduction of contactless means like NFC, PayPass or payWave. Such new methods speed-up the entire payment process and in comparison to cash transactions are much simpler and faster. But on the other hand the key question for merchant is if it is worth to have such device, which accept these new payment means or not to have the terminal at all. What is the amount of cash flow, which delimits the cash holdings to be still profitable? This paper tries to give answers to such question by presenting general profitability model, which will address defining the cash threshold amount. The aim is to show that cash holdings could be profitable up to certain amount, but after the threshold is met, cashless payment methods are fairly superior despite their additional costs.

Suggested Citation

  • Rudolf Vohnout & Zora Říhová & Iva Dostálková, 2016. "Electronic Payments Profitability Extent Model," Acta Informatica Pragensia, Prague University of Economics and Business, vol. 2016(2), pages 192-207.
    • Handle: RePEc:prg:jnlaip:v:2016:y:2016:i:2:id:94:p:192-207
    DOI: 10.18267/j.aip.94
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