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The changing nature of the payments system: should new players mean new rules?

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  • Loretta J. Mester

Abstract

Traditional forms of payment, such as currency, coin, and paper checks, are quickly being eclipsed by electronic forms, such as payments made by ATM, credit card, or automated clearing house. More recently, smart cards, debit cards, and PC banking have joined this electronic army of new ways to make payments. A parallel development has been the entrance of many nonbank players into the payments arena. Nowadays, settlement and clearing can be done by entities that are not necessarily banks, the customary center of the U.S. payments system. As these new entrants grow in number and become more popular, concerns about regulating these newcomers have arisen. In this article, Loretta Mester documents changes in the use of various forms of retail payments and outlines some of the regulatory concerns as she considers the question, Should new players mean new rules?

Suggested Citation

  • 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.
  • Handle: RePEc:fip:fedpbr:y:2000:i:mar:p:3-26
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    File URL: http://www.phil.frb.org/files/br/brma00lm.pdf
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    References listed on IDEAS

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    1. JAMES J. McANDREWS, 1999. "E‐Money And Payment System Risks," Contemporary Economic Policy, Western Economic Association International, vol. 17(3), pages 348-357, July.
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    5. James J. McAndrews, 1997. "Network issues and payment systems," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 15-25.
    6. Jeffrey M. Lacker, 1997. "The check float puzzle," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 1-26.
    7. anonymous, 1999. "Banking relationships of lower-income families and the governmental trend toward electronic payment," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jul, pages 459-473.
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    10. William Roberds, 1998. "The impact of fraud on new methods of retail payment," Economic Review, Federal Reserve Bank of Atlanta, vol. 83(Q 1), pages 42-52.
    11. Lawrence J. Radecki, 1999. "Banks' payments-driven revenues," Staff Reports 62, Federal Reserve Bank of New York.
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    Cited by:

    1. Catharine Lemieux, 2003. "Network vulnerabilities and risks in the retail payment system," Emerging Issues, Federal Reserve Bank of Chicago.
    2. Brian Mantel & Timothy McHugh, 2001. "Competition and innovation in the consumer e-payments market? considering the demand, supply, and public policy issues," Occasional Paper; Emerging Payments EPS-2001-4, Federal Reserve Bank of Chicago.

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    Keywords

    Payment systems;

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