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The Demand for Stored Value Payment Instruments

Author

Listed:
  • Pippow Ingo

    (Institute for Computer Sciences & Social Studies Freiburg)

  • Schoder Detlef

    (Institute for Computer Sciences & Social Studies Freiburg)

Abstract

Due to their functionality, stored value purses based on smart card technology are prominent candidates for being the dominant medium of exchange for micropayments. However, the overall prospects of these payment systems are yet ambiguous, both from the perspective of practice and monetary theory, because their potential to substitute for cash is still largely unknown. As a contribution to the field, a model is proposed founding the potential utilization of stored value cards in microeconomic calculus. As a result, the model provides insight into the crucial parameters determining usage. Moreover, the model suggests that issuers should maximize demand and profits by offering interest payments or insurance against loss.

Suggested Citation

  • Pippow Ingo & Schoder Detlef, 2002. "The Demand for Stored Value Payment Instruments," Microeconomics 0204002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpmi:0204002
    Note: Type of Document - Tex; prepared on IBM PC - PC-TEX; pages: 10; figures: included
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0204/0204002.pdf
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    References listed on IDEAS

    as
    1. C.K. Folkertsma & G.E. Hebbink, 1998. "Cash management and choice of payment media: a critical survey of the theory," WO Research Memoranda (discontinued) 532, Netherlands Central Bank, Research Department.
    2. Kabelac, Gabriele, 1999. "Netzgeld als Transaktionsmedium," Discussion Paper Series 1: Economic Studies 1999,05, Deutsche Bundesbank.
    3. Santomero, Anthony M & Seater, John J, 1996. "Alternative Monies and the Demand for Media of Exchange," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 942-960, November.
    4. Nicholas Economides, "undated". "Network Economics with Application to Finance," Financial Networks _004, Economics of Networks.
    5. James J. McAndrews, 1997. "Network issues and payment systems," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 15-25.
    6. M. Reichenbach & T. Grzebiela & T. Koltzsch & I. Pippow, 2002. "Individual Risk Management for Digital Payment Systems," Computational Economics 0204001, University Library of Munich, Germany.
    7. Casey B. Mulligan & Xavier Sala-i-Martin, 1995. "Adoption of financial technologies: Implications for money demand and monetary policy," Economics Working Papers 134, Department of Economics and Business, Universitat Pompeu Fabra.
    8. Shy, Oz & Tarkka, Juha, 2002. "The Market for Electronic Cash Cards," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 299-314, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Brack, Estelle, 2003. "Déterminants du développement du porte-monnaie électronique: Analyse Théorique et empirique: l’exemple Moneo
      [Electronic wallet development determinants:Theoretical and empirical analysis: Moneo in
      ," MPRA Paper 23453, University Library of Munich, Germany.

    More about this item

    Keywords

    Electronic Money; Stored Value; Digital Payment Instruments; Monetary Theory; Demand for Money;

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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