Electronic Payment Instruments Research Articles

Adopting, Using, and Discarding Paper and Electronic Payment Instruments: Variation by Age and Race

This paper uses data from the 2008 Survey of Consumer Payment Choice to discuss the adoption, use, and discarding of various common payment instruments. Using a nationally representative sample of individual-level data, it presents evidence in unparalleled detail about how consumers use different payment instruments. Most interestingly, it displays robust evidence of significant age- and race-related differences in payments choices. Among other things, it suggests that the range of payment instruments adopted and regularly used by blacks is narrower than that chosen by whites, presumably because of relatively limited access to financial institutions. With regard to age, it documents pervasive (and complex) age-related patterns at every step of the decisions to adopt, use, and discard payment instruments.

Managing Payment Transaction Costs at Multinational Online Retailers

Providing cost- and credit-efficient payment services to customers in e-commerce is a critical success factor for retailer competitiveness. However, country-specific payment provision strategies for internationally operating retailers are difficult to pinpoint, as existing research on the economics of payment instruments mostly focuses on transactions within one country, neglect electronic payment instruments due to data limitations, or base cost estimations on aggregated statistics or survey data. This article copes with these challenges by using a unique transaction-level data set with more than 29.1 million actual sales transactions, and examines how retailer transaction costs of online payment instruments invoice, credit card, PayPal, and prepayment differ across 14 European countries. Therein, this study identifies transaction cost differences due to country-specific pricing of payment services. Moreover, empirical results reveal that culture difference accounts for variation in customer payment timing and hence, affects retailer transaction costs when offering payment services in e-commerce. The presented research results allow retailers to holistically evaluate the efficiency of their current payment portfolio, and in developing country-specific payment provision strategies in order to reduce transaction costs and working capital requirements.

The practice of applying the provision of Article 297 of the Polish Penal Code

The aim of the publication is to present the results of research on the issue of the application of the provision of Article 297 of Polish Penal Code in practice and an attempt to evaluate them and an attempt to formulate conclusions. The features characterizing the offense under Article 297 § 1 of Polish Penal Code, which reads as follows: who, in order to obtain for himself or someone else, from a bank or organizational unit conducting similar economic activity under the Act or from an authority or institution with public funds - credit, monetary loan, surety, guarantee, letter of credit, subsidy, subsidy, confirmation by the bank of a liability arising from a surety or a guarantee or similar cash payment for a specific business purpose, payment instrument or public contract, submit counterfeit, converted, attesting untruth or unreliable document or unreliable written statement regarding circumstances of significant importance in order to obtain the mentioned financial support, payment instrument or order, it is punishable by imprisonment up from 3 months to 5 years. Discussed are also the indications of committing an act consisting in abandoning the notification in Article 297 § 2 of Polish Penal Code, worded as follows: who, in breach of a binding obligation, does not notify the relevant entity of the situation that may affect the cessation or limitation of the financial support referred to in § 1 or the public order or the possibility of further use of the electronic payment instrument. Next, the methodology of the research was described in detail. The research was of an files nature and concerned final judgments issued by courts of second instance. The time period of researches was from 2012 to 2016. A purposeful selection was also made due to the legal qualification of the deed on the basis of which the conviction was handed down in the first instance, i.e. the offenses under Article 297 of Polish Penal Code. Then the results of the research were presented and an attempt was made to comment on the results obtained. The conclusions from the research indicated, among others, the cases of lack of correct understanding of the provision, confusion of concepts, unnecessary automatic cumulative classification of the deed, narrowing the use of the instruments mentioned in the provision to credits, loans and subsidies, and many more cases.

전자지급수단을 둘러싼 실무상 몇 가지 쟁점에 관한 小考 - 직불형 전자지급수단 간 융합현상을 중심으로

전자지급수단을 둘러싼 실무상 몇 가지 쟁점에 관한 小考 - 직불형 전자지급수단 간 융합현상을 중심으로

Factors impeding the use of electronic payment instruments in emerging economies: The case of Colombia

Using a novel dataset for the five major cities in Colombia, this paper studies the factors that determine access, usage and acceptance of different payment instruments. It shows that, as may be the case in many emerging economies, the use of electronic payments for day-to-day purchases is low, even with adequate access to transactional financial products and services. This result is largely explained by the costs and the limited levels of acceptance by merchants. Other factors such as income, financial education, trust and informality are also important deterrents to the adoption and usage of electronic payments.

Features of the legal regulation of of electronic money in Ukraine; civil legal aspect

Problem Setting. The development of information technology, e-commerce caused the appearance of such phenomena as electronic money. In order to ensure the stability of currency in Ukraine, as well as the protection of the rights of users of electronic money need effective legislative base. That’s why, the research of electronic money in private law relations is very important.The purpose of the article. The research of the nature, the role and functioning of the electronic money in Ukraine are engaged by researchers as Y. Grytsiuk, I. Trubin, A. Isaev, M. Savluk, SA Derevyanko, A. Chepur, etc.The article studies features of the legal regulation of electronic money in Ukraine. Analyzed the concept of means of payment, legal payment’s instrument, electronic payment instrument and their relationship with the concept of electronic money. It was found civilistic nature of electronic moneyConclusions. The conclusion is that electronic money is a monetary obligation payable to bearer in electronic form, as the basis for their issuance is a civil contract. In addition, after the exchange of cash or non-cash money to the electronic money they keep their traditional cost of money and can serve as payment instrument.

From paper-based to electronic payments in the Pacific Islands: How and by how much would Tonga benefit in the transition process?

Efficiency gains due to migration to lower-cost retail payment instruments could entail significant benefits to economic development and financial inclusion. This paper uses Tonga as a case study in order to examine savings that could be achieved in three main areas of payment systems reforms in the process of transitioning from paper-based to electronic payment instruments: remittances, government payments, and overall payments infrastructure and interoperability. Assuming an upfront cost and constant annual savings due to reforms, the paper projects an initial fixed cost of modernising the payments infrastructure of 0.5 per cent of the current GDP, and net savings of up to 3.2 per cent of the current GDP in ten years for Tonga.

Moving towards electronic payments in India

Nowadays, the modernisation of payment systems is occurring throughout the world, the difference being the pace of modernisation in different countries. The question is no longer whether countries should adopt electronic payment instruments, as the evidence showing the cost efficiency that comes with them seems overwhelming, but rather, what the policy steps are in order to move faster towards their adoption. Certainly, India is not outside this reality. Indeed, the transition to electronic payments would lead to savings for the different segments of society in India, and would also lead to positive macroeconomic effects. This paper uses India as a case study in order to explore the shift paradigm from cash to electronic payments. The first part of the paper examines the cost issue from a theoretical perspective, showing how the cost inefficiency of cash can serve as an incentive in itself to persuade the Indian authorities to move away from its use. The second part provides policy recommendations on how the transition can be achieved in practice. More specifically, the recommendations for intervention are based on three grounds: financial inclusion; legal and regulatory framework; and innovative technology.

Changing Payment Patterns at Point-of-Sale: Their Drivers

Based on household surveys from 2004 and 2014 we show how payment patterns in the Netherlands have changed. This data is unique because it covers a long time span and includes detailed information on payment behaviour per point-of-sale (POS). In this period the usage of the debit card has increased sharply. Perceived characteristics of payment instruments have affected both their adoption and the intensity by which they are used. Of these, user-friendliness and safety are the most important drivers of the adoption of electronic payment instruments. Socio-demographic determinants of payment instrument adoption are quite robust over time. However, we find that the relevance of payment characteristics and socio-demographic characteristics for the intensity of use of payment instruments varies per POS and over time when instruments get generally adopted. Overall, user-friendliness is still the most important aspect and safety and speed remained relevant aspects, whereas costs are the least important aspect for the intensity by which payment instruments are used.

Strategic Management of New Products: Ex-Ante Simulation and Market Segmentation

Among various methodologies for demand forecasting of new products, the random-coefficient discrete-choice model using stated preference data is considered to be effective because it reflects heterogeneity in consumer preference and enables the design of experiments in the absence of revealedpreference data. Based on estimates drawn from consumer preference data by structural hierarchical Bayesian logit models, this study develops the overall, strategic, demand-side management for new products by combining market share simulation and a rigorous clustering methodology, the Gaussian mixture model. It then applies the process to the empirical case of electronic payment instruments.

Eterogeneità nelle abitudini di pagamento: confronto tra paesi europei e specificità italiane (Why are Payment Habits so Heterogeneous Across and within Countries? Evidence from European Countries and Italian Regions)

The aim of this work is to arrive at a better understanding of the underlying reasons for the slow adoption of electronic payment instruments in Italy. Our findings indicate that a pivotal role in explaining Italy’s lag in abandoning cash is played by development factors, such as innovative capability and income per capita. Surprisingly, although the shadow economy is important, it is not decisive in explaining the limited use of electronic retail payment instruments.

Real-Time Collection of the Value-Added Tax: Some Business and Legal Implications

Recent estimates of the level of VAT fraud in the EU are commensurate with the EU budget. With the Green paper on the future of VAT, the European Commission stressed the urgency and necessity of comprehensive VAT reforms. This paper analyses the business and legal implications of the recently proposed split-payment mechanism, which, if implemented, would move VAT’s method of collection to real-time. The discussion is positioned in the context of two increasingly visible trends in the EU – the general shift towards greater reliance on indirect taxation and the growing popularity of electronic payment instruments. The potential implementation of VAT withholding would be a radical reform, given its shift of the taxation system from voluntary to forced compliance. We argue that, on the one hand, real-time VAT collection would constitute a potent preventive measure against VAT fraud, which could generate synergetic effects within SEPA, and further deepen integration through the harmonisation of VAT policies. On the other hand, real-time audit/refund would require tax authorities’ access to confidential business information that may be incompatible with EU privacy rules. The trade-off between efficient tax collection and privacy concerns mirrors the general debate on data protection in a cashless economy.

Retail Payments and Economic Growth

This paper examines the fundamental relationship between retail payments and overall economic growth. Using data from across 27 European markets over the period 1995–2009, the results confirm that migration to efficient electronic retail payments stimulates overall economic growth, consumption and trade. Among different payment instruments, this relationship is strongest for card payments, followed by credit transfers and direct debits. Cheque payments are found to have a relatively low macroeconomic impact. Retail payment transaction technology itself is also associated positively to real economic aggregates. We also show that initiatives to integrate and harmonise retail payment markets foster trade and consumption and thereby have a beneficial effect for whole economy. Additionally, the findings reveal that the impact of retail payments on economic growth is more pronounced in euro area countries. Our findings are robust to different regression specifications. The study supports the adoption of policies promoting a swift migration to efficient and harmonised electronic payment instruments.

Returns to Retail Banking and Payments

The present paper examines the fundamental relationship between the country-level infrastructure of the retail payment market and overall bank performance. Using data from across 27 European markets over the period 2000–07, the results confirm that the performance of banks in countries with more developed retail payment service markets is better. This relationship is stronger in countries with a relatively high adoption of retail payment transaction technologies. Retail payment transaction technology itself can also improve bank performance, and evidence shows that heterogeneity in retail payment instruments is associated with enhanced bank performance. Similarly, higher usage of electronic retail payment instruments seems to stimulate banking business. We also show that retail payment services have a more significant impact on savings and cooperative bank performance, although they have a positive influence on the performance of commercial banks as well. Additionally, the findings reveal that the impact of retail services on bank performance is more pronounced through fee income, although their impact through interest income is also positive. Finally, an effective payment service market is found to be associated with higher bank stability. Our findings are robust to different regression specifications.

INTERCHANGE FEES IN PAYMENT CARD SYSTEMS: A SURVEY OF THE LITERATURE

Abstract This paper surveys the recent literature about interchange fees in payment card systems. Interchange fees are used by payment platforms to allocate the total cost of a payment card transaction between the cardholder's bank, the issuer, and the merchant's bank, the acquirer. Each time a consumer pays by card, its bank receives an interchange fee from the merchants' bank. Banks argue that interchange fees are needed to encourage the use of electronic payment instruments, whereas merchants claim that they artificially inflate the cost of accepting cards. This paper sheds light on the ongoing debate that opposes banks to the regulatory institutions or the competition authorities in various countries, by reviewing the theoretical results of the literature and highlighting some unanswered issues.

Allocating liability in the event of fraudulent use of electronic payment instruments and the Belgian mobile payment instrument PingPing

With unauthorised (fraudulent) payment transactions, the question arises as to whether the payment service user or the payment service provider must bear the financial consequences. This article focuses on the Payment Services Directive, which determines who is liable in the event of an unauthorised payment transaction. First, there is a discussion of the allocation of liability with the use of a 'traditional' electronic payment instrument, such as a debit card or a credit card. In this part of the paper, specific attention is paid to the concept of gross negligence and the problems of the burden of proof. In the second part of the article, there is a discussion of the applicability of these rules on the allocation of liability to the new Belgian PingPing payment system.

Adopting, Using, and Discarding Paper and Electronic Payment Instruments: Variation by Age and Race

This paper uses data from the 2008 Survey of Consumer Payment Choice to discuss the adoption, use, and discarding of various common payment instruments. Using a nationally representative sample of individual-level data, it presents evidence in unparalleled detail about how consumers use different payment instruments. Most interestingly, it displays robust evidence of significant age- and race-related differences in payments choices. Among other things, it suggests that the range of payment instruments adopted and regularly used by blacks is narrower than that chosen by whites, presumably because of relatively limited access to financial institutions. With regard to age, it documents pervasive (and complex) age-related patterns at every step of the decisions to adopt, use, and discard payment instruments.

Return from Retail Banking and Payments

The European banking industry joined forces to achieve a fully integrated market for retail payment services in the euro area: The Single Euro Payments Area (SEPA). Against this background, the present paper examines the fundamental relationship between retail payment business and overall bank performance. Using data from across 27 European markets over the period 2000-07, we analyse whether the provisions of retail payment services are reflected in improved bank performance, using accounting ratios and efficiency measures. The results confirm that the performance of banks in countries with more developed retail payment service markets is better. This relationship is stronger in countries with a relatively high adoption of retail payment transaction technologies. Retail payment transaction technology itself can also improve bank performance, and evidence shows that heterogeneity in retail payment instruments is associated with enhanced bank performance. Similarly, a higher usage of electronic retail payment instruments seems to stimulate banking business. We also show that retail payment services have a more significant impact on savings and cooperative bank performance although they have a positive influence on the performance of commercial banks. Additionally, findings reveal that impact of retail services on bank performance is dominated by fee income. Finally, an effective payment service market is found to be associated with higher bank stability. Our findings are robust to different regression specifications. The results may also be informative for the industry when reconsidering its business models in the light of current financial market developments.

Return to Retail Banking and Payments

The European banking industry joined forces to achieve a fully integrated market for retail payment services in the euro area: the Single Euro Payments Area (SEPA). Against this background, the present paper examines the fundamental relationship between retail payment business and overall bank performance. Using data from across 27 European markets over the period 2000-07, we analyse whether the provisions of retail payment services are reflected in improved bank performance, using accounting ratios and efficiency measures. The results confirm that the performance of banks in countries with more developed retail payment service markets is better. This relationship is stronger in countries with a relatively high adoption of retail payment transaction technologies. Retail payment transaction technology itself can also improve bank performance, and evidence shows that heterogeneity in retail payment instruments is associated with enhanced bank performance. Similarly, a higher usage of electronic retail payment instruments seems to stimulate banking business. We also show that retail payment services have a more significant impact on savings and cooperative bank performance although they have a positive influence on the performance of commercial banks. Additionally, findings reveal that impact of retail services on bank performance is dominated by fee income. Finally, an effective payment service market is found to be associated with higher bank stability. Our findings are robust to different regression specifications. The results may also be informative for the industry when reconsidering its business models in the light of current financial market developments. JEL Classification: G21, G28

Legal Aspects of Credit Transfers and Electronic Payments: A Belgian Perspective

This paper discusses several legal issues regarding credit transfers and the electronic payment instruments most often used in Belgium, i.e. debit cards and credit cards. More specifically the following questions will be addressed: who is liable in case of late or erroneous execution of a payment transaction, who bears the risk in case of fraud, when does payment take place and is it possible to revoke a payment transaction, once it has been initiated? In answering these questions we will not only take into account the Belgian legislation as it exists today, but we will also refer to the European Directive on Payment Services in the Internal Market which has to be transposed by 1 November 2009 and that will change the Belgian legislation considerably on a few points.