Greater digitization of commerce has brought enormous benefits to businesses and consumers. By using digital payment capabilities and online marketplaces, many micro, small, and medium enterprises (MSMEs) are more able to compete with larger firms through greater customer choice and reach. This paper examines the results of a Visa Economic...
A core function of any banking system is the provision of payments. However, a greater number of non-banks are becoming part of the payments landscape. Payments can be made via fiat or crypto currencies, bank credit or deposits, or funds transfers on the books of non-bank payment providers. Most of...
Carbó, Chakravorti, and Rodriguez study the impact of lowering interchange fees on consumer and merchant adoption and usage along with bank revenues during a ten-year period in Spain using bank-level data. Using cutting-edge econometric techniques, they are able to test two-sided market model predictions about payment card pricing policies. They...
In this article, Chakravorti and McHugh address why consumers, merchants, and financial institutions are reluctant to embrace electronic payments even though electronic payment networks, such as the credit card and automated clearinghouse (ACH) networks, have existed for more than 25 years. While most Internet-based transactions are primarily processed via credit...
This article concerns electronic bill presentment and payment (EBPP) in the business-to-consumer (B2C) marketplace and, more specifically, remote bill payments (as opposed to payments made at the point of sale).B2C EBPP applications are plausibly among the most promising innovations to shift U.S. consumer payments from checks to electronic alternatives. By...
Over the last decade, consumers have tripled their use of credit cards as more merchants have increased their acceptance of them. This increase suggests that incentives in today’s marketplace favor greater credit card use by consumers and acceptance by merchants. In this paper, Chakravorti and Shah study the set of...
Chakravorti investigates payments system reforms begun by the Bank of Mexico in 1994. The goals of these reforms are to reduce the amount of uncollateralized intraday credit extended by the Bank of Mexico (previously unlimited), to promote a market-based allocation of intraday credit for interbank payments, and to move large-value...
In this article, Chakravorti argues that consumers’ use of newer, less expensive payment alternatives depends on the incentives merchants and payment instrument providers offer, along with consumers’ comfort level and faith in the instruments. Once consumers are comfortable with the newer electronic alternatives, cost of usage, convenience, and frequent-use incentives...