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Network issues and payment systems

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  • James J. McAndrews

Abstract

Highways, railroads, pipelines—we see or hear about these types of physical networks almost every day. But information systems, such as the Internet, and payment systems, such as ATMs and credit cards, also involve networks. Hence, understanding the economics of networks and the unique features of network-dependent industries is crucial to modern life. In this article, James McAndrews outlines some of the unique features of network-dependent industries. He also analyzes some related payment-system issues and demonstrates that determining appropriate public policy would be difficult without a knowledge of the economics of payment networks.

Suggested Citation

  • James J. McAndrews, 1997. "Network issues and payment systems," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 15-25.
  • Handle: RePEc:fip:fedpbr:y:1997:i:nov:p:15-25
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    File URL: http://www.phil.frb.org/files/br/brnd97jm.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Wilko Bolt & David B. Humphrey, 2005. "Public Good Aspects of TARGET: Natural Monopoly, Scale Economies, and Cost Allocation," DNB Working Papers 036, Netherlands Central Bank, Research Department.
    2. Pippow Ingo & Schoder Detlef, 2002. "The Demand for Stored Value Payment Instruments," Microeconomics 0204002, EconWPA.
    3. Michael C. Bonello & George M. von Furstenberg & Kari Kemppainen & Sinikka Salo, 2006. "The Adoption of the Euro, Choice of Currency Regime and Integration of Payment Systems," SUERF Studies, SUERF - The European Money and Finance Forum, number 2006/5 edited by Morten Balling.
    4. Chakravorti Sujit, 2003. "Theory of Credit Card Networks: A Survey of the Literature," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-19, June.
    5. Jean-Marc Figuet, 2009. "La mise en place de TARGET2 : un élément de la nouvelle architecture financière de l’économie européenne," Revue d'Économie Financière, Programme National Persée, vol. 94(1), pages 329-338.
    6. Sujit Chakravorti & Alpa Shah, 2001. "A study of the interrelated bilateral transactions in credit card networks," Occasional Paper; Emerging Payments EPS-2001-2, Federal Reserve Bank of Chicago.
    7. Kemppainen, Kari, 2008. "Integrating European retail payment systems : some economics of SEPA," Research Discussion Papers 22/2008, Bank of Finland.
    8. Gilbert, Erika W. & Scott, William L., 2001. "The Financial Modernization Act: new perspectives for the finance curriculum," Financial Services Review, Elsevier, vol. 10(1-4), pages 197-208.
    9. Snellman, Heli, 2006. "Automated teller machine network market structure and cash usage," Scientific Monographs, Bank of Finland, number 2006_038, November.
    10. Bolt, Wilko & Humphrey, David, 2005. "Public good issues in TARGET: natural monopoly, scale economies, network effects and cost allocation," Working Paper Series 505, European Central Bank.
    11. Loretta J. Mester, 2000. "The changing nature of the payments system: should new players mean new rules?," Business Review, Federal Reserve Bank of Philadelphia, issue Mar, pages 3-26.
    12. Batiz-Lazo, Bernardo & Maixe-Altes, J. Carles, 2009. "Managing technological change by committee: Adoption of computers in Spanish and British savings banks (circa 1960-1988)," MPRA Paper 27086, University Library of Munich, Germany.
    13. Jean-Charles Rochet, 2007. "Some economics of horizontal integration in the payments industry," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City.
    14. Stacey L. Schreft, 2002. "Clicking with dollars : how consumers can pay for purchases from E-tailers," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 37-64.
    15. W. Bolt, 2003. "Retail Payments in the Netherlands: some Facts and Some Theory," WO Research Memoranda (discontinued) 722, Netherlands Central Bank, Research Department.
    16. Robert M. Hunt, 2003. "Antitrust issues in payment card networks: can they do that? should we let them?," Business Review, Federal Reserve Bank of Philadelphia, issue Q2, pages 14-23.
    17. Alessandra Guariglia & Yiing Jia Loke, 2004. "What determines the value and volume of noncash transactions? Evidence from a panel of European and North American countries," Applied Economics, Taylor & Francis Journals, vol. 36(4), pages 291-303.
    18. Kenneth N. Kuttner & James J. McAndrews, 2001. "Personal on-line payments," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 35-50.
    19. Kari Kemppainen, 2004. "Competition and regulation in European retail payment systems," Microeconomics 0404008, EconWPA.
    20. Hayashi Fumiko & Klee Elizabeth, 2003. "Technology Adoption and Consumer Payments: Evidence from Survey Data," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-16, June.
    21. Solomon, Elinor Harris, 1999. "What should regulators do about consolidation and electronic money?," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 645-653, February.

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    Payment systems;

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