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The Market for Electronic Cash Cards

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Author Info
Shy, Oz
Tarkka, Juha () (Bank of Finland Research)

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Abstract

We develop a theoretical framework aimed to model the pricing of electronic money (electronic cash cards) and the market domain in which it will be used. We first calculate the fee structures of electronic cash- and charge-card industries for the monopoly and competitive cases. We show that the different market structures do not affect the domain of electronic cash cards and the displacement of currency in daily transactions. We provide a welfare analysis to determine whether a market equilibrium generates an underutilization or overutilization of the electronic cash cards relative to currency. Finally, we evaluate the threshold investment costs, both general and POS-specific, which would prevent the emergence of this industry.

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File URL: http://www.bof.fi/NR/rdonlyres/23E5CD39-5AD2-4141-B432-6C41C78EF284/0/DP_21_1998.pdf
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Publisher Info
Paper provided by Bank of Finland in its series Research Discussion Papers with number 21/1998.

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Length: 35 pages
Date of creation: 26 Oct 1998
Date of revision:
Handle: RePEc:hhs:bofrdp:1998_021

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Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.bof.fi/en/tutkimus
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Related research
Keywords: electronic money; smart cards; displacement of currency;

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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.:
  1. Mayes, D.G., 1998. "Evolving Voluntary Rules for the Operation of European Central Bank," Bank of Finland - Studies in Economics and Finance 2/98, Bank of Finland. Research Department..
  2. Anthony M. Santomero & John J. Seater, 1996. "Alternative monies and the demand for media of exchange," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 942-964.
    Other versions:
  3. Pirttila, J., 1998. "Earmarking of Environmental Taxes: Efficient, After All," Bank of Finland - Studies in Economics and Finance 4/98, Bank of Finland. Research Department..
    Other versions:
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.)

  1. Jonathan Zinman, 2005. "Debit or credit?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston. [Downloadable!]
  2. 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. [Downloadable!]
  3. Snellman, Jussi & Vesala, Jukka & Humphrey, David, 2000. "Substitution of noncash payment instruments for cash in Europe," Research Discussion Papers 1/2000, Bank of Finland. [Downloadable!]
  4. Saleh M. Nsouli & Connel Fullenkamp, 2004. "Six Puzzles in Electronic Money and Banking," IMF Working Papers 04/19, International Monetary Fund. [Downloadable!]
  5. Marco Arnone & Luca Bandiera, 2004. "Monetary Policy, Monetary Areas, and Financial Development with Electronic Money," IMF Working Papers 04/122, International Monetary Fund. [Downloadable!]
  6. W. Bolt, 2003. "Retail Payments in the Netherlands: some Facts and Some Theory," WO Research Memoranda (discontinued) 722, Netherlands Central Bank, Research Department. [Downloadable!]
  7. Elizabeth Klee, 2006. "Paper or plastic? the effect of time on the use of check and debit cards at grocery stores," Finance and Economics Discussion Series 2006-02, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  8. Fumiko Hayashi & Elizabeth Klee, 2002. "Technology adoption and consumer payments : evidence from survey data," Payments System Research Working Paper PSR WP 02-01, Federal Reserve Bank of Kansas City.
  9. Jyrkönen , Hanna, 2004. "Less cash on the counter: Forecasting Finnish payment preferences," Research Discussion Papers 27/2004, Bank of Finland. [Downloadable!]
  10. Eugene Amromin & Sujit Chakravorti, 2007. "Debit card and cash usage: a cross-country analysis," Working Paper Series WP-07-04, Federal Reserve Bank of Chicago. [Downloadable!]
  11. Nicole Jonker, 2007. "Payment Instruments as Perceived by Consumers – Results from a Household Survey," De Economist, Springer, vol. 155(3), pages 271-303, September. [Downloadable!] (restricted)
  12. Sujit Chakravorti & Victor Lubasi, 2006. "Payment instrument choice: the case of prepaid cards," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 29-43. [Downloadable!]
  13. Catalina Amuedo-Dorantes & Susan Pozo, 2004. "On the Use of Differing Money Transmission Methods by Mexican Immigrants," Economic Working Papers at Centro de Estudios Andaluces E2004/06, Centro de Estudios Andaluces. [Downloadable!]
  14. Pippow Ingo & Schoder Detlef, 2002. "The Demand for Stored Value Payment Instruments," Microeconomics 0204002, EconWPA. [Downloadable!]
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