What's in it for us? : network effects and bank payment innovation

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Title: What's in it for us? : network effects and bank payment innovation
Author: Milne, Alistair
Organization: Suomen Pankki
Series: Bank of Finland Research Discussion Papers
Series number: 16/2005
Year of publication: 2005
Publication date: 1.6.2005
Pages: 27 s.
Keywords: Iso-Britannia; verkostot; pankkitoiminta; maksujärjestelmät; kannustimet; innovaatiot; Ruotsi; Suomi; Norja; pankkitekniikka; teknologia; ulkoisvaikutukset
JEL: G21; L14
Abstract: The developed world exhibits substantial but poorly understood differences in the efficiency and quality of low-value payment services.This paper compares payments arrangements in the UK, Norway, Sweden, and Finland, and discusses the impact of network effects on incentives to adopt new payments technology.A model is presented, in which private benefits for investment in shared inter-bank payments infrastructure are weak.In contrast, due to 'account externalities', there are strong incentives for investment in intra-bank payment systems.These two features, distinguishing bank payments from other network industries, can help explain some of the observed cross country differences in payments arrangements. Key words: network effects, incentives, payment technology, externalities JEL classification numbers: G21, L14
Rights: https://helda.helsinki.fi/bof/copyright

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