Payment Scale Economies and the Replacement of Cash and Stored Value Cards
AbstractDebit cards in Europe replace many medium value cash payments while stored value cards were designed to replace small value cash transac-tions. Unit cost considerations dictated a two-card (or single card) dual technology approach to cash replacement since unit costs were too high to use debit cards alone for low value transactions. We estimate payment scale economies and illustrate the change in processing volume likely needed to permit debit cards to cost-e¤ectively replace a greater portion of smaller value cash transactions, allowing consumers and merchants to use increasingly a single cash replacement technology. Key Words : Debit cards, scale economies, cash replacement
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Bibliographic InfoPaper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 122.
Date of creation: Dec 2006
Date of revision:
Debit cards; scale economies; cash replacement;
Find related papers by JEL classification:
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-02 (All new papers)
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