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Costs and benefits of building faster payment systems: the U.K. experience and implications for the United States

Author

Listed:
  • Claire Greene
  • Marc Rysman
  • Scott Schuh
  • Oz Shy

Abstract

This paper studies the economic cost-benefit analysis behind the decision by the United Kingdom on how to implement its Faster Payments Service (FPS), which allows consumers and businesses to rapidly transfer money between bank accounts, and draws implications for the U.S. payments system.

Suggested Citation

  • Claire Greene & Marc Rysman & Scott Schuh & Oz Shy, 2014. "Costs and benefits of building faster payment systems: the U.K. experience and implications for the United States," Current Policy Perspectives 14-5, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbcq:2014_005
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    References listed on IDEAS

    as
    1. Klee, Elizabeth, 2008. "How people pay: Evidence from grocery store data," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 526-541, April.
    2. Sergei Koulayev & Marc Rysman & Scott Schuh & Joanna Stavins, 2016. "Explaining adoption and use of payment instruments by US consumers," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 293-325, May.
    3. Shy Oz, 2012. "Account-to-Account Electronic Money Transfers: Recent Developments in the United States," Review of Network Economics, De Gruyter, vol. 11(1), pages 1-25, March.
    4. Borzekowski, Ron & Kiser, Elizabeth K., 2008. "The choice at the checkout: Quantifying demand across payment instruments," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 889-902, July.
    5. Susan Herbst-Murphy, 2013. "Clearing and settlement of interbank card transactions: a MasterCard tutorial for Federal Reserve payments analysts," Consumer Finance Institute discussion papers 13-02, Federal Reserve Bank of Philadelphia.
    6. Bruce J. Summers & Kirstin E. Wells, 2011. "Emergence of immediate funds transfer as a general-purpose means of payment," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 35(Q III), pages 97-112.
    7. Katy Jacob & Kirstin E. Wells, 2011. "Evaluating the potential of immediate funds transfer for general-purpose payments in the United States," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Nov.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Marc Rysman & Scott Schuh, 2017. "New Innovations in Payments," Innovation Policy and the Economy, University of Chicago Press, vol. 17(1), pages 27-48.
    2. Hartmann, Monika & Gijsel, Lola Hernandez-van & Plooij, Mirjam & Vandeweyer, Quentin, 2019. "Are instant payments becoming the new normal? A comparative study," Occasional Paper Series 229, European Central Bank.
    3. Scott Schuh & Joanna Stavins, 2016. "How Do Speed And Security Influence Consumers' Payment Behavior?," Contemporary Economic Policy, Western Economic Association International, vol. 34(4), pages 595-613, October.
    4. Franklin Allen & Xian Gu & Julapa Jagtiani, 2021. "A Survey of Fintech Research and Policy Discussion," Review of Corporate Finance, now publishers, vol. 1(3-4), pages 259-339, July.
    5. David Hao Zhang, 2016. "How do people pay rent?," Research Data Report 16-2, Federal Reserve Bank of Boston.
    6. Christian Pfister, 2018. "(Real-)Time Is Money," Working papers 675, Banque de France.
    7. Małgorzata Hałasik-Kozajda & Martyna Olbryś, 2021. "Skutki implementacji dyrektywy o usługach płatniczych (PSD2)," Bank i Kredyt, Narodowy Bank Polski, vol. 52(3), pages 267-296.
    8. Cinderella Dube & Victor Gumbo, 2017. "Adoption and Use of Information Communication Technologies in Zimbabwean Supermarkets," Applied Economics and Finance, Redfame publishing, vol. 4(1), pages 84-92, January.

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    More about this item

    Keywords

    fast payments systems; account-to-account (A2A) transfers; person-to-person payments; cost-benefit analysis;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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