The Market for Electronic Cash Cards
AbstractWe 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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Bibliographic InfoPaper provided by Bank of Finland in its series Research Discussion Papers with number 21/1998.
Length: 35 pages
Date of creation: 26 Oct 1998
Date of revision:
electronic money; smart cards; displacement of currency;
Other versions of this item:
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- G20 - Financial Economics - - Financial Institutions and Services - - - General
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"Alternative Monies and the Demand for Media of Exchange,"
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- Anthony M. Santomero & John J. Seater, 1995. "Alternative Monies and the Demand for Media of Exchange," Center for Financial Institutions Working Papers 96-08, Wharton School Center for Financial Institutions, University of Pennsylvania.
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