The Economics of Bill Payments: An Empirical Analysis

16 Pages Posted: 25 Jul 2008 Last revised: 22 Aug 2011

See all articles by David Bounie

David Bounie

Telecom ParisTech

Abel Francois

Strasbourg University, LARGE; University of Strasbourg - EM Strasbourg Business School; Telecom ParisTech

Date Written: August 12, 2008

Abstract

The growing economic literature dedicated to payment instruments mainly focus on payments at point of sale. Yet, credit transfers and direct debits used in bill payments are much more used in the Euro area than checks, payments cards and other payment instruments. The main objective of this paper is therefore to verify whether the standard framework stated for payments at point of sale is relevant to study the economics of bill payments. Using an original data set, we show that the main predictions of the standard model do not hold.

First, consumers do not seem to be sensitive to transaction costs in bill payments and second, the transaction size does not influence the choice of the payment instruments. These results argue for a new theoretical framework to analyze the use of payment instruments in bill payments.

Keywords: Payment Instruments, bill payments

JEL Classification: E17

Suggested Citation

Bounie, David and Francois, Abel, The Economics of Bill Payments: An Empirical Analysis (August 12, 2008). Available at SSRN: https://ssrn.com/abstract=1174298 or http://dx.doi.org/10.2139/ssrn.1174298

David Bounie (Contact Author)

Telecom ParisTech ( email )

46 rue Barrault
F-75634 Paris, Cedex 13
France

Abel Francois

Strasbourg University, LARGE ( email )

47 avenue de la foret Noire
Strasbourg, 67000
France

HOME PAGE: http://abelfrancois.wordpress.com/information/

University of Strasbourg - EM Strasbourg Business School ( email )

PEGE
61 avenue de la Forêt Noire
Strasbourg, 67000
France

HOME PAGE: http://abelfrancois.wordpress.com/information/

Telecom ParisTech

46, rue Barrault
Paris Cedex 13, F-75634
France

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