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The effect of transaction pricing on the adoption of electronic payments: a cross-country comparison

Author

Listed:
  • Wilko Bolt
  • David B. Humphrey
  • Roland Uittenbogaard

Abstract

Pricing should speed up the substitution of low cost electronic payments for expensive paper-based transactions and cash. But by how much? Norway has explicitly priced individual payment transactions and rapidly shifted to electronic payments while the Netherlands has experienced the same shift without direct pricing. Controlling for differences between countries, the authors estimate the incremental effect of pricing on the shift to electronic payments. If users strongly value the improved convenience or security of electronic payments, pricing?viewed negatively by most consumers?may not be necessary to ensure rapid adoption of electronic payments. ; Also issued as Payment Cards Center Discussion Paper No. 05-18

Suggested Citation

  • Wilko Bolt & David B. Humphrey & Roland Uittenbogaard, 2005. "The effect of transaction pricing on the adoption of electronic payments: a cross-country comparison," Working Papers 05-28, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:05-28
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    References listed on IDEAS

    as
    1. Nicole Jonker, 2005. "Payment Instruments as Perceived by Consumers - a Public Survey," DNB Working Papers 053, Netherlands Central Bank, Research Department.
    2. Humphrey, David B & Kim, Moshe & Vale, Bent, 2001. "Realizing the Gains from Electronic Payments: Costs, Pricing, and Payment Choice," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 216-234, May.
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    6. Jonathan Zinman, 2004. "Why use debit instead of credit? Consumer choice in a trillion-dollar market," Staff Reports 191, Federal Reserve Bank of New York.
    7. Meade, Nigel & Islam, Towhidul, 1995. "Forecasting with growth curves: An empirical comparison," International Journal of Forecasting, Elsevier, vol. 11(2), pages 199-215, June.
    8. Wilko Bolt & Alexander F. Tieman, 2004. "Skewed Pricing in Two-Sided Markets: An IO approach," DNB Working Papers 013, Netherlands Central Bank, Research Department.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Constanza Martínez Ventura, 2019. "The use of cash and debit cards as payment instruments in Colombia," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 90, pages 71-95, Enero - J.
    2. Sandra Deungoue, 2008. "Compétition pour les paiements : une titanomachie revisitée par la modélisation multi-agents," Post-Print halshs-00269129, HAL.
    3. Martínez Ventura, Constanza, 2019. "El uso de efectivo y tarjetas débito como instrumentos de pago en Colombia," Revista Lecturas de Economía, Universidad de Antioquia, CIE, issue 90, pages 71-95, January.
    4. Sandra Deungoue, 2008. "Compétition pour les paiements : une titanomachie revisitée par la modélisation multi-agents," Working Papers 0810, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    5. Nicole Jonker & Thijs Kettenis, 2007. "Explaining cash usage in the Netherlands: the effect of electronic payment instruments," DNB Working Papers 136, Netherlands Central Bank, Research Department.
    6. Nicole Jonker, 2007. "Payment Instruments as Perceived by Consumers – Results from a Household Survey," De Economist, Springer, vol. 155(3), pages 271-303, September.
    7. Allen, Franklin & Qian, Jun & Zhang, Chenying, 2011. "An Alternative View on Law, Institutions, Finance and Growth," Working Papers 11-64, University of Pennsylvania, Wharton School, Weiss Center.
    8. Bolt, Wilko & Jonker, Nicole & van Renselaar, Corry, 2010. "Incentives at the counter: An empirical analysis of surcharging card payments and payment behaviour in the Netherlands," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1738-1744, August.
    9. Wilko Bolt & David Humphrey & Roland Uittenbogaard, 2008. "Transaction Pricing and the Adoption of Electronic Payments: A Cross-Country Comparison," International Journal of Central Banking, International Journal of Central Banking, vol. 4(1), pages 89-123, March.
    10. Abdullai, Besim, 2009. "The EPS as an e-commerce enabler: The Macedonian perspective," MPRA Paper 13996, University Library of Munich, Germany, revised 05 Mar 2009.
    11. Wilko Bolt & David Humphrey, 2006. "Payment Scale Economies and the Replacement of Cash and Stored Value Cards," DNB Working Papers 122, Netherlands Central Bank, Research Department.
    12. Imaduddin Sahabat & Teguh Dartanto & Haidy A. Passay & Diah Widyawati, 2017. "Electronics Payment Decisions of the Indonesian Urban Households: A Nested Logit Analysis of the Effects of the Payment Characteristics," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 498-511.
    13. 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.
    14. Fumiko Hayashi & Richard J. Sullivan & Stuart E. Weiner, 2006. "A guide to the ATM and debit card industry - 2006 update," Monograph, Federal Reserve Bank of Kansas City, number 2006agttaadci2.

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    Keywords

    Electronic funds transfers; Prices;

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