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

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  • Wilko Bolt
  • David 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

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Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 05-28.

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Date of creation: 2005
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Handle: RePEc:fip:fedpwp:05-28

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Keywords: Electronic funds transfers ; Prices;

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References

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  1. Wilko Bolt & Alexander F Tieman, 2005. "Skewed Pricing in Two-Sided Markets: An IO approach," Money Macro and Finance (MMF) Research Group Conference 2005 75, Money Macro and Finance Research Group.
  2. Nicole Jonker, 2005. "Payment Instruments as Perceived by Consumers - a Public Survey," DNB Working Papers 053, Netherlands Central Bank, Research Department.
  3. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06.
  4. 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 216-34, May.
  5. 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.
  6. Meade, Nigel & Islam, Towhidul, 1995. "Forecasting with growth curves: An empirical comparison," International Journal of Forecasting, Elsevier, vol. 11(2), pages 199-215, June.
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Cited by:
  1. Nicole Jonker, 2007. "Payment Instruments as Perceived by Consumers – Results from a Household Survey," De Economist, Springer, vol. 155(3), pages 271-303, September.
  2. Fumiko Hayashi & Rick 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.
  3. Wilko Bolt & Nicole Jonker & Corry van Renselaar, 2008. "Incentives at the counter: An empirical analysis of surcharging card payment and payment behaviour in the Netherlands," DNB Working Papers 196, Netherlands Central Bank, Research Department.
  4. 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.
  5. 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.
  6. Nicole Jonker & Anneke Kosse & Lola Hernández, 2012. "Cash usage in the Netherlands: How much, where, when, who and whenever one wants?," DNB Occasional Studies 1002, Netherlands Central Bank, Research Department.
  7. 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.
  8. 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.
  9. Marianne Verdier & Abel François & Marc Bourreau & David Bounie, 2008. "La détention et l’usage des instruments de paiement en France," Revue d'Économie Financière, Programme National Persée, vol. 91(1), pages 53-76.
  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. 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 (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  12. Sandra Deungoue, 2008. "Compétition pour les paiements : une titanomachie revisitée par la modélisation multi-agents," Post-Print halshs-00269129, HAL.
  13. Abdullai, Besim, 2009. "The Electronic Payment System as an e-commerce enabler: The Macedonian perspective," MPRA Paper 13994, University Library of Munich, Germany, revised Mar 2009.

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