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Consumers’ use of prepaid cards: a transaction-based analysis

Author

Listed:
  • Stephanie M. Wilshusen
  • Robert M. Hunt
  • James van Opstal
  • Rachel Schneider

Abstract

The Payment Cards Center of the Federal Reserve Bank of Philadelphia and the Center for Financial Services Innovation conducted this research project using transaction-level data provided by Meta Payment Systems in an effort to develop a better understanding of how consumers use prepaid cards by examining their transaction behavior and the issuer revenue and cardholder costs generated by those transactions.

Suggested Citation

  • Stephanie M. Wilshusen & Robert M. Hunt & James van Opstal & Rachel Schneider, 2012. "Consumers’ use of prepaid cards: a transaction-based analysis," Payment Cards Center Discussion Paper 12-02, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpdp:12-02
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    File URL: http://www.philadelphiafed.org/consumer-credit-and-payments/payment-cards-center/publications/discussion-papers/2012/D-2012-August-Prepaid.pdf
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    References listed on IDEAS

    as
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    2. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    3. Marius Schwartz & Daniel Vincent, 2002. "Same Price, Cash, or Card: Vertical Control by Payment Networks," Working Papers gueconwpa~02-02-01, Georgetown University, Department of Economics.
    4. Wright, Julian, 2003. "Pricing in debit and credit card schemes," Economics Letters, Elsevier, vol. 80(3), pages 305-309, September.
    5. Sujit Chakravorti & Timothy McHugh, 2002. "Why do we use so many checks?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III, pages 44-59.
    6. Julian Wright, 2004. "The Determinants of Optimal Interchange Fees in Payment Systems," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 1-26, March.
    7. Joshua S. Gans & Stephen P. King, 2003. "A Theoretical Analysis of Credit Card Reform in Australia," The Economic Record, The Economic Society of Australia, vol. 79(247), pages 462-472, December.
    8. JOHN M. Barron & MICHAEL E. Staten & JOHN Umbeck, 1992. "Discounts For Cash In Retail Gasoline Marketing," Contemporary Economic Policy, Western Economic Association International, vol. 10(4), pages 89-102, October.
    9. Gans Joshua S & King Stephen P, 2003. "The Neutrality of Interchange Fees in Payment Systems," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-18, January.
    10. Schmalensee, Richard, 2002. "Payment Systems and Interchange Fees," Journal of Industrial Economics, Wiley Blackwell, vol. 50(2), pages 103-122, June.
    11. William P. Osterberg & James B. Thomson, 1998. "Network externalities: the catch-22 of retail payments innovations," Economic Commentary, Federal Reserve Bank of Cleveland, issue Feb.
    12. Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
    13. Kitch, Edmund W, 1990. "The Framing Hypothesis: Is It Supported by Credit Card Issuer Opposition to a Surcharge on a Cash Price?," Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(1), pages 217-233, Spring.
    14. Brito, Dagobert L & Hartley, Peter R, 1995. "Consumer Rationality and Credit Cards," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 400-433, April.
    15. Jean-Charles Rochet & Jean Tirole, 2002. "Cooperation Among Competitors: Some Economics Of Payment Card Associations," RAND Journal of Economics, The RAND Corporation, pages 549-570.
    16. Wright, Julian, 2003. "Optimal card payment systems," European Economic Review, Elsevier, vol. 47(4), pages 587-612, August.
    17. Baxter, William F, 1983. "Bank Interchange of Transactional Paper: Legal and Economic Perspectives," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 541-588, October.
    18. Ausubel, Lawrence M, 1991. "The Failure of Competition in the Credit Card Market," American Economic Review, American Economic Association, vol. 81(1), pages 50-81, March.
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    Citations

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    Cited by:

    1. Ingmar Geiger & Manuel Kluckert & Michael Kleinaltenkamp, 2017. "Customer acceptance of tradable service contracts," Journal of Business Economics, Springer, vol. 87(2), pages 155-183, February.
    2. Hayashi, Fumiko & Cuddy, Emily, 2014. "Recurrent overdrafts: a deliberate decision by some prepaid cardholders?," Research Working Paper RWP 14-8, Federal Reserve Bank of Kansas City.
    3. Heng Chen & Marie-Hélène Felt & Kim Huynh, 2014. "Retail Payment Innovations and Cash Usage: Accounting for Attrition Using Refreshment Samples," Staff Working Papers 14-27, Bank of Canada.
    4. W. Scott Frame & Lawrence J. White, 2009. "Technological Change, Financial Innovation, and Diffusion in Banking," Working Papers 09-03, New York University, Leonard N. Stern School of Business, Department of Economics.
    5. Hayashi, Fumiko & Hanson, Josh & Maniff, Jesse Leigh, 2015. "Driver of choice? the cost of financial products for unbanked consumers," Research Working Paper RWP 15-15, Federal Reserve Bank of Kansas City.
    6. Hayashi, Fumiko & Cuddy, Emily, 2014. "General purpose reloadable prepaid cards : penetration, use, fees and fraud risks," Research Working Paper RWP 14-1, Federal Reserve Bank of Kansas City.

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    Keywords

    Payment systems;

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