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Forecasting the Electronification of Payments with Learning Curves: The Case of Finland

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  • Snellman, Jussi
  • Vesala, Jukka

    ()
    (Bank of Finland)

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    Abstract

    This paper examines the electronification of noncash payments in Finland and the extent to which noncash payment means are used as substitutes for cash. We model the processes of cash substitution and electronification of payments as 'S'-shaped learning curves and generate forecasts by extrapolating these curves. The 'S'-shaped learning curves fit the data well. Our results indicate that in Finland the cash substitution process as a whole is approaching the saturation point. Although the electronification process is clearly ongoing as regards larger-value bill payments, for small-value point-of-sale payments we seem to have reached saturation. Electronification of payments, having progressed swiftly and extensively in Finland, is already beginning to slow down. We conclude the paper with a discussion of the reasons for this turn of events and of the different factors that affect the speed of diffusion of new means of payment.

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    File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/9908.pdf
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    Bibliographic Info

    Paper provided by Bank of Finland in its series Research Discussion Papers with number 8/1999.

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    Length: 35 pages
    Date of creation: 20 Jul 1999
    Date of revision:
    Handle: RePEc:hhs:bofrdp:1999_008

    Contact details of provider:
    Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
    Web page: http://www.suomenpankki.fi/en/
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    Related research

    Keywords: payments; electronification; learning curves;

    References

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    1. Katz, Michael L & Shapiro, Carl, 1986. "Product Compatibility Choice in a Market with Technological Progress," Oxford Economic Papers, Oxford University Press, vol. 38(0), pages 146-65, Suppl. No.
    2. Meade, Nigel & Islam, Towhidul, 1995. "Forecasting with growth curves: An empirical comparison," International Journal of Forecasting, Elsevier, vol. 11(2), pages 199-215, June.
    3. repec:fth:bfsefi:28/98 is not listed on IDEAS
    4. Kauko, Karlo, 1998. "Developing the Interbank Payment System. Efficiency of Public versus Private Investments," Research Discussion Papers 28/1998, Bank of Finland.
    5. Young, Peg & Ord, J. Keith, 1989. "Model selection and estimation for technological growth curves," International Journal of Forecasting, Elsevier, vol. 5(4), pages 501-513.
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    Cited by:
    1. Jyrkönen , Hanna, 2004. "Less cash on the counter: Forecasting Finnish payment preferences," Research Discussion Papers 27/2004, Bank of Finland.
    2. Guerino Ardizzi & Eleonora Iachini, 2013. "Why are payment habits so heterogeneous across and within countries? Evidence from European countries and Italian regions," Questioni di Economia e Finanza (Occasional Papers) 144, Bank of Italy, Economic Research and International Relations Area.

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