Using a unique administrative level dataset from a large and diverse U.S. financial institution, Agarwal, Chakravorti, and Lunn test the impact of rewards on credit card spending and debt. Specifically, we study the impact of cash-back rewards on individuals before and during their enrollment in the program. We find that...
On June 21–22, 2010, the Chicago Fed and the University of Granada co-sponsored a conference that brought together policymakers, academics, and industry practitioners to discuss evolving retail payment systems and the role of public authorities, with several panels focusing on the Single Euro Payments Area.
In his presentation, Bob Chakravorti described several new and pending payment regulations in the United States at the Cards & Payments 2010 conference held in Paris, France.
Chakravorti, Gunther, and Moore suggest a subtle, yet far-reaching, tension in the objectives specified by the Monetary Control Act of 1980 (MCA) for the Federal Reserve’s role in providing retail payment services, such as check processing. Specifically, we argue that the requirement of an overall cost-revenue match, coupled with the...
In this article, Chakravorti asks why have general-purpose stored-value cards been unsuccessful in penetrating the U.S. market? Three necessary conditions for a payment instrument to be successful are discussed: consumers and merchants need to be convinced of its advantages over existing payment alternatives for at least some types of transactions...
In his lecture as part of a broader course on Effective Oversight of Payment and Settlement Systems: Maintaining Financial Plumbing edited by Charles Kahn, Chakravorti describes the underlying economics of retail payments including substitution of payment instruments, regulation of them, and underlying incentives to use them. He looks at specific...
In this book chapter, Chakravorti considers linkages between consumer payments and credit. Payors, those that make payments, and payees, those that receive payments, choose among various payment instruments based on their preferences toward convenience, risk, and cost. According to a recent U.S. survey, the usage of payment cards is increasing...
Chakravorti and To construct a two-period model to study the interactions among consumers, merchants, and a card issuer. The model yields the following results. First, if the issuer's cost of funds is not too high and the merchant's profit margin is sufficiently high, in every equilibrium of our model the...
Chakravorti and Jankowski summarize the 2005 Chicago Payments conference. The migration to more efficient payment mechanisms is affected by innovations, incentives, and regulations. While advances in technology have yielded numerous payment method alternatives, many have not been widely adopted. A Chicago Fed conference explored why certain payment innovations have been...
Chakravorti and Kobor provide a framework to study the creation and adoption of innovations by payment providers and processors. The authors identify several motivating factors for banks and nonbanks to invest in payment innovations. In addition, they discuss the evolutionary process of payment innovations from inception to commoditization and recognize...