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PayTech and the D(ata) N(etwork) A(ctivities) of BigTech Platforms

Author

Listed:
  • Jonathan Chiu

    (Bank of Canada)

  • Thorsten V. Koeppl

Abstract

Why do BigTech platforms introduce payment services? Digital platforms often run business models where activities on the platform generate data that can be monetized off the platform. There is a trade-o between the value of such data and the privacy concerns of users, since platforms need to compensate users for their privacy loss by subsidizing activities. The nature of complementarities between data and payments determines the introduction of payments. When data help to provide better payments (data-driven payments), platforms have too little incentives to adopt. When payments generate additional data (payments-driven data), platforms may adopt payments inefficiently.

Suggested Citation

  • Jonathan Chiu & Thorsten V. Koeppl, 2022. "PayTech and the D(ata) N(etwork) A(ctivities) of BigTech Platforms," Working Paper 1490, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1490
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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1490.pdf
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    References listed on IDEAS

    as
    1. He, Zhiguo & Huang, Jing & Zhou, Jidong, 2023. "Open banking: Credit market competition when borrowers own the data," Journal of Financial Economics, Elsevier, vol. 147(2), pages 449-474.
    2. Choi, Jay Pil & Jeon, Doh-Shin & Kim, Byung-Cheol, 2019. "Privacy and personal data collection with information externalities," Journal of Public Economics, Elsevier, vol. 173(C), pages 113-124.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Zijian Wang, 2023. "Money Laundering and the Privacy Design of Central Bank Digital Currency," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 604-632, December.

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    More about this item

    Keywords

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    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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