The Demand for Stored Value Payment Instruments
AbstractDue to their functionality, stored value purses based on smart card technology are prominent candidates for being the dominant medium of exchange for micropayments. However, the overall prospects of these payment systems are yet ambiguous, both from the perspective of practice and monetary theory, because their potential to substitute for cash is still largely unknown. As a contribution to the field, a model is proposed founding the potential utilization of stored value cards in microeconomic calculus. As a result, the model provides insight into the crucial parameters determining usage. Moreover, the model suggests that issuers should maximize demand and profits by offering interest payments or insurance against loss.
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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0204002.
Length: 10 pages
Date of creation: 19 Apr 2002
Date of revision:
Note: Type of Document - Tex; prepared on IBM PC - PC-TEX; pages: 10; figures: included
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Electronic Money; Stored Value; Digital Payment Instruments; Monetary Theory; Demand for Money;
Find related papers by JEL classification:
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-06-13 (All new papers)
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