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Payment instrument choice: the case of prepaid cards

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  • Sujit Chakravorti
  • Victor Lubasi

Abstract

The costs and benefits to payment system participants can differ depending on which payment mechanism is used. The authors specifically explore the costs and benefits of prepaid card applications versus other payment instruments, such as cash, checks, and debit cards, for certain payment segments, including gift, payroll, and employer-initiated and government benefit programs.

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File URL: http://www.chicagofed.org/digital_assets/publications/economic_perspectives/2006/ep_2qtr2006_part3_chakravorti_Lubasi.pdf
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Article provided by Federal Reserve Bank of Chicago in its journal Economic Perspectives.

Volume (Year): (2006)
Issue (Month): Q II ()
Pages: 29-43

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Handle: RePEc:fip:fedhep:y:2006:i:qii:p:29-43:n:v.30no.2
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Keywords: Payment systems;

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  1. 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.
  2. Stacey L. Schreft, 1997. "Looking forward : the role for government in regulating electronic cash," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 59-84.
  3. Humphrey, David B., 2004. "Replacement of cash by cards in US consumer payments," Journal of Economics and Business, Elsevier, vol. 56(3), pages 211-225.
  4. Shy, Oz & Tarkka, Juha, 2002. "The Market for Electronic Cash Cards," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 299-314, May.
  5. Arthur J. Rolnick & Warren E. Weber, 1988. "Explaining the demand for free bank notes," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 21-35.
  6. Chakravorti, Sujit & To, Ted, 2007. "A theory of credit cards," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 583-595, June.
  7. Sujit Chakravorti & Carrie Jankowski, 2005. "Forces shaping the payments environment: a summary of the Chicago Fed’s 2005 Payments Conference," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Oct.
  8. Sujit Chakravorti & Emery Kobor, 2003. "Why invest in payment innovations?," Emerging Issues, Federal Reserve Bank of Chicago, issue Jun.
  9. Sujit Chakravorti & Erin Davis, 2004. "An electronic supply chain: will payments follow?," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Sep.
  10. Rolnick, Arthur J. & Weber, Warren E., 1988. "Explaining the demand for free bank notes," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 47-71, January.
  11. Victor Lubasi, 2005. "Debit card competition: signature versus pin," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Dec.
  12. Whitesell, William C, 1992. "Deposit Banks and the Market for Payment Media," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(4), pages 483-98, November.
  13. Eugene Amromin & Carrie Jankowski & Richard Porter, 2006. "Inducing more efficient payment on the Illinois Tollway," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Apr.
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Cited by:

  1. Wilko Bolt & Sujit Chakravorti, 2008. "Economics of payment cards: a status report," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 15-27.
  2. Wilko Bolt & Sujit Chakravorti, 2011. "Pricing in Retail Payment Systems: A Public Policy Perspective on Pricing of Payment Cards," DNB Working Papers 331, Netherlands Central Bank, Research Department.
  3. Carrie Jankowski & Richard Porter & Tara Rice, 2007. "Against the tide—currency use among Latin American immigrants in Chicago," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 2-21.
  4. Santiago Carbó Valverde & Sujit Chakravorti & Francisco Rodríguez-Fernández, 2009. "Regulating two-sided markets: an empirical investigation," Working Paper Series WP-09-11, Federal Reserve Bank of Chicago.
  5. Marc Bourreau & Marianne Verdier, 2010. "Cooperation for Innovation in Payment Systems: The Case of Mobile Payments," EconomiX Working Papers 2010-5, University of Paris West - Nanterre la Défense, EconomiX.
  6. Helmi Hamdi, 2007. "Some Ambiguities Concerning the Development of Electronic Money," Financial Theory and Practice, Institute of Public Finance, vol. 31(3), pages 293-307.
  7. Wilko Bolt & Sujit Chakravorti, 2010. "Digitization of Retail Payment," DNB Working Papers 270, Netherlands Central Bank, Research Department.
  8. 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.
  9. Ronald J. Mann, 2011. "Adopting, using, and discarding paper and electronic payment instruments: variation by age and race," Public Policy Discussion Paper 11-2, Federal Reserve Bank of Boston.

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