Payment Network Research Articles

Corporate payments networks and credit risk rating

Aggregate and systemic risk in complex systems are emergent phenomena depending on two properties: the idiosyncratic risk of the elements and the topology of the network of interactions among them. While a significant attention has been given to aggregate risk assessment and risk propagation once the above two properties are given, less is known about how the risk is distributed in the network and its relations with its topology. We study this problem by investigating a large proprietary dataset of payments among 2.4M Italian firms, whose credit risk rating is known. We document significant correlations between local topological properties of a node (firm) and its risk. Moreover we show the existence of an homophily of risk, i.e. the tendency of firms with similar risk profile to be statistically more connected among themselves. This effect is observed when considering both pairs of firms and communities or hierarchies identified in the network. We leverage this knowledge to show the predictability of the missing rating of a firm using only the network properties of the associated node.

The influence of intra- and inter-system concentration on the pre-regulated setting of interchange fees within cooperative card payment networks

This paper deals with motives and consequences of regulatory involvement in cooperative card payment networks across the European Union and USA. The aim is to draw a bridge between the theoretical framework of two-sided markets and observable industry characteristics. By consolidating a data set on intra- and inter-industry concentration in acquiring, issuing and card scheme markets, a multivariate analysis of the determinants of interchange fees is enabled. Unlike previous studies, it departs from a pure theoretical view and empirically assesses the influence of concentration, rather than market externalities, in the setting of interchange fees. Findings allow for a preliminary assessment of the applicability of established theoretical models and policy intervention in card payment markets. Contrary to widespread belief, acquirer markets show to be highly (and more) concentrated than issuer markets which are characterised by a relative degree of concentration. Results show that concentration has a statistically significant influence on the setting of interchange fees in credit and debit card markets. Findings within this paper call for a more conservative regulatory involvement, as well as a review of utilised economic models incorporating empirical evidence.

Regulating Bitcoin Exchanges: A Risk-Based Approach

Bitcoin, the decentralised peer-to-peer payment system equips us with a new revolutionary financial tool to send codified value across the globe. As a peer-to-peer payment network, however, bitcoin’s decentralised characteristics make it significantly challenging for regulators to influence bitcoin governance. With legacy regulation insufficiently commanding control over the bitcoin network, regulatory debate has shifted towards finding appropriate regulatory solutions for mitigating bitcoin risk crystallisation. Stark academic regulatory analysis on bitcoin exchange risk has created a profound gap in the literature and sets a logical starting point for this thesis. Using a technical risk-based methodology, I analyse bitcoin exchange risk under three broad headings: consumer protection, financial stability, and anti-money laundering and terrorist financing. Assessing objective empirical evidence, I argue that contrary to mainstream regulatory opinion, the most salient bitcoin exchange risk pertains to consumer protection. From theft, fraud, embezzlement, hacking, and various other scandals, the bitcoin exchange marketplace, for the most part, constitutes as a 'wild west' environment. Inadequate wallet storage mechanisms, insecure cyber security, and deficient capital adequacy requirements, to name but a few, consistently engender risk and harm consumers. As a result, I argue that the slow response from European regulators to address these issues calls for a reevaluation of risk appraisal and a need for a more robust consumer oriented regulatory structure. In that manner, I posit for a 'consumer by design' regulatory framework that inter alia emphasises cold wallet infrastructure, holistic cyber security measures, and capital adequacy requirements. The focal point of this approach centers on changing predominantly malevolent and negligent bitcoin exchange behaviors to that of a prudentially minded entity. Hard targeted risk-based rules fabricate this change, which coincides with post 2008 crises consensus for more financial regulation and the proposition that markets benefit from effective regulatory architecture.

Two-Sided Market, R&D and Payments System Evolution

It takes many years for more efficient electronic payments to be widely used, and the fees that merchants (consumers) pay for using those services are increasing (decreasing) over time. We address these puzzles by studying payments system evolution with a dynamic model in a two-sided market setting. We calibrate the model to the U.S. payment card data, and conduct welfare and policy analysis. Our analysis shows that the market power of electronic payment networks plays important roles in explaining the slow adoption and asymmetric price changes, and the welfare impact of regulations may vary significantly through the endogenous R&D channel.

区际农业生态补偿标准及“两横”财政跨区域转移机制——以虚拟耕地为载体

PDF HTML阅读 XML下载 导出引用 引用提醒 区际农业生态补偿标准及“两横”财政跨区域转移机制——以虚拟耕地为载体 DOI: 10.5846/stxb201810282324 作者: 作者单位: 作者简介: 通讯作者: 中图分类号: 基金项目: 国家自然科学基金项目（41771565）；河南省高校科技创新人才（人文社科类）支持计划（2019-cx-014） The “Two Horizon” inter-regional agro-ecological compensation standard and cross-regional financial transfer mechanism: a study based on virtual cultivated land Author: Affiliation: Fund Project: 国家自然科学基金项目（41771565） 摘要 | 图/表 | 访问统计 | 参考文献 | 相似文献 | 引证文献 | 资源附件 | 文章评论 摘要:探讨以虚拟耕地为载体的区际农业生态补偿原理，从两个层面（省际与省域内部市际）开展区际农业生态补偿支付/受偿面积和财政转移额度的测算，最后提出了以补偿管理平台为中介的"两横"财政转移路径。结果表明：①虚拟耕地调出地区付出了过多的经济、资源和生态代价，需要以虚拟耕地为载体对之进行生态补偿。可以根据虚拟耕地净流量进行支付/受偿区域划分和支付/受偿面积的确定。②在省际补偿方面，支付区域包括16个省份，其中支付虚拟耕地面积较大的省市主要分布在东部沿海地区和西南地区；受偿区域包括15个省份，其中受偿虚拟耕地面积较大的省市主要分布在东北地区、华北地区和西北地区。在省域内部市际补偿方面，支付虚拟耕地面积较大地市多为省域内经济发展水平相对较高的地市，受偿虚拟耕地面积较大的地市多为省域内经济发展水平相对较低、农业生产条件优越的地市。③无论是省际层面还是省域内部市际层面，受偿的额度和支付的额度均呈现集中分布的特点。在省际补偿方面，支付额度较大的广东、北京、浙江、上海、天津、江苏和湖北等省市在研究期内年均值超过25亿元；受偿额度较大的黑龙江、吉林、河南、内蒙古、安徽、山东、湖南和河北等省市在研究期内年均值超过40亿元。在省域内部市际补偿方面，江苏、河南和甘肃三省支付额度排名前二分之一地市的总额所占的比例都超过了80%，受偿额度排名前二分之一地市的总额所占的比例都超过70%。④"两横"支付网络通过两级支付管理平台的中介作用可以实现省际和省域内部市际两个层面的区际农业生态补偿跨区域转移。 Abstract:This paper discusses the principle of inter-regional agricultural ecological compensation based on a virtual cultivated land. and calculates the payment/reception area and financial transfer amount of inter-regional agricultural ecological compensation at two levels (inter-provincial and intra-provincial inter-city). Finally, it puts forward the "two horizontal" financial transfer path with compensation management platform as the intermediary.The results show that (1) the virtual cultivated land transfer area has paid excessive economic, resource and ecological costs, which need to be ecologically compensated by the virtual cultivated land as the carrier. In practice, the payment/reception region can be divided and payment/reception area can be calculated according to the net flow of virtual cultivated land.(2) In terms of inter-provincial compensation, the payment area consists of 16 provinces. among which the provinces with large virtual farmland area are mainly distributed in the eastern coastal areas and the southwestern region; The reception area contains 15 provinces, and the provinces and cities with large virtual cultivated land payment areas are mainly distributed in the north-eastern, north and north-western areas. In terms of inter-city compensation within a province, the cities with large payment areas of virtual cultivated land are mostly those with relatively high economic development levels within a province, the cities with large area of compensated virtual cultivated land are those with relatively low level of economic development and superior conditions of agricultural production conditions. (3) The amounts of compensation and payment are centralized at the provincial level or the inter-city level within a province. In terms of inter-provincial compensation, the average annual values for Guangdong, Beijing, Zhejiang, Shanghai, Tianjin, Jiangsu and Hubei provinces, and the municipalities with larger payment amounts exceeded 2.5 billion Yuan during the study period; and the average annual values for Heilongjiang, Jilin, Henan, Inner Mongolia, Anhui, Shandong, Hunan and Hebei provinces and municipalities with larger compensation amounts exceeded 4 billion Yuan. In terms of inter-provincial-inter-city compensation, the top 50% of the cities in Jiangsu, Henan and Gansu were responsible for more than 80% of the total payment and more than 70% of the total compensation amount. (4) The ‘two horizontal’ payment network can predict the inter-regional transfer of agricultural ecological compensation between provinces and cities within provinces via the intermediary role of the corresponding management platform. 参考文献 相似文献 引证文献

Detecting overlapping community structure: Estonian network of payments

Revealing the community structure exhibited by real networks is a fundamental phase towards a comprehensive understanding of complex systems beyond the local organization of their components. Community detection techniques help on providing insights into understanding the local organization of the components of networks. In this study we identify and investigate the overlapping community structure of an interesting and unique case of study: the Estonian network of payments. In order to perform the study, we use the Clique Percolation Method and explore statistical distribution functions of the communities, where in most cases we found scale-free properties. In this network the nodes represent Estonian companies and the links represent payments done between the companies. Our study adds to the literature of complex networks by presenting the first overlapping community detection analysis of a country's network of payments.

Measuring E-Service Quality and Customer Satisfaction with Internet Banking in India

The objective of this study is to measure the e-service quality of internet banking and the relationship with customer satisfaction in India. This study aims to explore the critical factors of e-service quality of internet banking in India and to measure the customers’ satisfaction of internet banking on the identified e-service quality dimensions. A survey method was carried out to acquire data from 650 respondents from India. Exploratory and confirmatory factor analysis was used to identify the dimensions of internet banking. Multiple Regression Analysis was used to test the relationship with e-service quality dimensions and customer satisfaction of internet banking. The study uncovered three factors of e-service quality, namely, “Responsiveness,” “Efficiency,” and “Perceived Credibility”. “Responsiveness” found to be the most significant predictor of the e-service quality of internet banking. The study also found that there is a positive relationship exists between e-service quality dimensions and customer satisfaction of internet banking. These findings can be used by banks to improve the service quality of their internet banking service and thereby to satisfy their customers. The findings open up many business opportunities to India as well as other Asian countries. The digital payments industry can concentrate on improving the security of the payment systems, gateways, and payment networks. Advanced technologies can be developed to improve the digital payment systems which offer many business opportunities for creating computers, smartphones, and innovation in internet and security software. The study findings can be used by banks to improve the service quality of internet banking and attract more customers towards using this service. The improvement in service quality comprising of responsiveness, efficiency, and perceived credibility automatically leads to the customer satisfaction of internet banking services, which gives competitive advantages to the banks. This study is an attempt to cover both urban and rural population of India to understand the digital mindset by studying the quality perception of internet banking channel.

Market reaction to the European antitrust investigations in the payment card industry

This paper aims to analyse the stock price reaction of European banks involved in antitrust authority interventions regarding the payment card business. The main objective is to assess whether market discipline is effective and able to complement regulation (Berger et al., 2000) despite the opacity of the business (Morgan, 2002). To this end, we collect all interventions made by both domestic antitrust authorities and by the European Commission to investigate and/or sanction anticompetitive behaviour in the payment card sector over the period 2004-2015. This results in a sample of 24 events, involving 135 listed banks operating in the EU-27 area. We run an event study analysis based on a traditional market model in order to estimate cumulated abnormal returns (CARs), considering both the date when the formal investigation is open and the date when the outcome of the procedure is communicated to the market. Our findings provide weak evidence in favour of the effectiveness of market discipline, with a significant (negative) market reaction only for investigations involving a small number of well-identified banking institutions, while procedures involving large banking associations or payment networks do not generate any relevant reaction.

Specific statistical properties of the strength of links and nodes of the Estonian network of payments

Specific statistical properties of the strength of links and nodes of the Estonian network of payments

Two-Sided Market, R&D and Payments System Evolution

It takes many years for more efficient electronic payments to be widely used, and the fees that merchants (consumers) pay for using those services are increasing (decreasing) over time. We address these puzzles by studying payments system evolution with a dynamic model in a twosided market setting. We calibrate the model to the U.S. payment card data, and conduct welfare and policy analysis. Our analysis shows that the market power of electronic payment networks plays important roles in explaining the slow adoption and asymmetric price changes, and the welfare impact of regulations may vary significantly through the endogenous R&D channel.

Reconnecting the Dots for the Payment Service Directive 2 - Compatible Asian Financial Network

Unlike the popular belief, digital transformation mainly gets stymied by legal and regulatory issues related with legacy institutions in Asia rather than technical difficulties. The real challenges triggered by the PSD2 (Payment Services Directive 2) are how the region would overcome the overly fragmented, centralized, and hierarchical legacy framework to allow necessary changes to respond to the digital single market initiatives as promulgated by the European counterpart. The PSD2 is expected to bring about substantial changes in the payment ecosystem by allowing payment service providers to access customers’ accounts and transactions information via API that have been traditionally controlled by banks. This paper suggests an incentive-compatible mechanism design for open collaboration among legacy institutions in the region to help them adapt to the PSD2. As evidenced by case studies in Korea, the Asian equivalent of PSD2 can be implemented and further expanded to create region-wide PCS (payment-clearing-settlement) network by reconnecting the dots of legacy infrastructures. These decentralized, diverse, small payment networks can be further combined with the expanded RTGS-CDS platform to evolve into the next phase of Asian Financial Network.

Two-Sided Market, R&D and Payments System Evolution

It takes many years for more efficient electronic payments to be widely used, and the fees that merchants (consumers) pay for using those services are increasing (decreasing) over time. We address these puzzles by studying payments system evolution with a dynamic model in a two-sided market setting. We calibrate the model to the U.S. payment card data, and conduct welfare and policy analysis. Our analysis shows that the market power of electronic payment networks plays important roles in explaining the slow adoption and asymmetric price changes, and the welfare impact of regulations may vary significantly through the endogenous R&D channel.

The Economic Fallout of Exclusion of the Islamic Republic of Iran from the SWIFT International Payment Network

The Economic Fallout of Exclusion of the Islamic Republic of Iran from the SWIFT International Payment Network

The CLoTH Simulator for HTLC Payment Networks with Introductory Lightning Network Performance Results

The Lightning Network (LN) is one of the most promising off-chain scaling solutions for Bitcoin, as it enables off-chain payments which are not subject to the well-known blockchain scalability limit. In this work, we introduce CLoTH, a simulator for HTLC payment networks (of which LN is the best working example). It simulates input-defined payments on an input-defined HTLC network and produces performance measures in terms of payment-related statistics (such as time to complete payments and probability of payment failure). CLoTH helps to predict issues and obstacles that might emerge in the development stages of an HTLC payment network and to estimate the effects of an optimisation action before deploying it. We conducted simulations on a recent snapshot of the HTLC payment network of LN. These simulations allowed us to identify network and payments configurations for which a payment is more likely to fail than to succeed. We proposed viable solutions to avoid such configurations.

Scalable funding of Bitcoin micropayment channel networks.

The Bitcoin network has scalability problems. To increase its transaction rate and speed, micropayment channel networks have been proposed; however, these require to lock funds into specific channels. Moreover, the available space in the blockchain does not allow scaling to a worldwide payment system. We propose a new layer that sits in between the blockchain and the payment channels. The new layer addresses the scalability problem by enabling trustless off-blockchain channel funding. It consists of shared accounts of groups of nodes that flexibly create one-to-one channels for the payment network. The new system allows rapid changes of the allocation of funds to channels and reduces the cost of opening new channels. Instead of one blockchain transaction per channel, each user only needs one transaction to enter a group of nodes—within the group the user can create arbitrarily many channels. For a group of 20 users with 100 intra-group channels, the cost of the blockchain transactions is reduced by 90% compared to 100 regular micropayment channels opened on the blockchain. This can be increased further to 96% if Bitcoin introduces Schnorr signatures with signature aggregation.

From Rai stones to Blockchains: The transformation of payments

Computer technology has dramatically changed the marketplace, including the way we make payments. Electronic access to funds expands liquidity and the relationships within payment networks allow strangers to build bridges of trust, increasing trade and human interaction. But electronic payment channels have also presented new challenges in security and privacy, including new forms of criminal behavior and tax avoidance for governments to address. This essay outlines some of the legal, social, and technological implications from this transformation of payments and assesses future challenges in the electronic payments frontier.

Can Bitcoin’s Volatility Be Tamed?

Bitcoin is a software for operating a peer-to-peer payment network with its own hard money, without having to rely on a trusted third party. As the use of this network has grown, the value of the token underpinning it has increased sharply, with its total outstanding supply currently exceeding $100 billion in value. As Bitcoin begins to attract attention as an investment asset, major questions remain about its volatility, whether that volatility can be reduced, and whether or not it could stand in the way of Bitcoin gaining a monetary role in society. This article explains Bitcoin’s volatility as a consequence of its completely inflexible and constantly decreasing supply growth, and describes why that is a design feature necessary for Bitcoin to operate successfully. No potential alterations to Bitcoin’s design can thus be expected to alleviate its volatility. The article draws an analogy between Bitcoin and gold to examine whether continued growth of the Bitcoin network would help it gain more stability, or whether the lack of stability will prevent the network from growing beyond its status as a fringe network.

Cards on the Table: Efficiency and Welfare Effects of the No-Surcharge Rule

Abstract In Electronic Payment Networks (EPNs), the No-Surcharge Rule (NSR) requires that merchants charge at most the same amount for a payment card transaction as for cash. In this paper, I use a three-party model (consumers, local monopolistic merchants, and a proprietary EPN) with endogenous transaction volumes, heterogeneous card use benefits for merchants and network externalities of card-accepting merchants on cardholders to assess the efficiency and welfare effects of the NSR. I show that the NSR: (i) promotes retail price efficiency for cardholders, and (ii) inefficiently reduces card acceptance among merchants. The NSR can enhance social welfare and improve payment efficiency by shifting output from cash payers to cardholders. However, if network externalities are sufficiently strong, the reduction of card payment acceptance affects cardholders negatively and, with the exception of the EPN, all agents will be worse off under the NSR. This paper also suggests that the NSR may be an instrument to decrease cash usage, but the social optimal policy on the NSR may depend on the competitive conditions in each market.

Bitcoin’s Pygmalion Effect: Social Entrepreneurs are a Bit-Curious in Marketing a Special Kind of Property!

Entrepreneurs enter new markets to find high-growth areas. Bitcoin is a cryptographic, software networked, complexly engineered, high energy consuming, permission-less and programmable crypto-currency. Bitcoin appears to be in higher demand among social entrepreneurs than customers resulting in a Pygmalion Effect. The purpose of the study is to examine three main questions: (1) Will Bitcoin’s marketing gain a sustainable traction as a currency of choice for daily transactions? (2) Will Bitcoin scale to become a major payment network on a global scale? (3) Will Bitcoin be replaced by multiple viable crypto-currencies? The study explored how Bitcoins Pygmalion effect will impact consumer’s privacy, purchasing-habits and businessrelationships with cross border payments within the framework of crypto-currency. This study draws on the works of Reither et al. (2017), Yates (2017), Ortisi et al (2016), Bert and Chris (2017), Reijers (2016), Houy and Nicholas (2014). The research method of the study is based on the quality content analysis and primarily relied on the recent research articles, and surveys. The findings contribute to the existing discussion on the Bitcoin mining and the marketing of the cryptographic tokens and block-chain technologies. This study posits that bitcoin has value because both the Pygmalion entrepreneurs and customers believe that it has value and it is likely to be among mainstream global viable currencies. The final sections provide directions for future research on how crypto-companies need to build their distinct message and project it into the larger block-chain conversation for social entrepreneurs. Key implications for researchers, practitioners and policy makers are highlighted.

Corporate Payments Networks and Credit Risk Rating

This paper provides empirical evidences that corporate firms risk assessment could benefit from taking quantitatively into account the network of interactions among firms. Indeed, the structure of interactions between firms is critical to identify risk concentration and the possible pathways of propagation of financial distress. In this work, we consider the interactions by investigating a large proprietary dataset of payments among Italian firms. We first characterise the topological properties of the payment networks, and then we focus our attention on the relation between the network and the risk of firms. Our main finding is to document the existence of an homophily of risk, i.e. the tendency of firms with similar risk profile to be statistically more connected among themselves. This effect is observed when considering both pairs of firms and communities or hierarchies identified in the network. We leverage this knowledge to predict the missing rating of a firm using only network properties of a node by means of machine learning methods.