The Ethics of Payments: Paper, Plastic, or Bitcoin?

20 Pages Posted: 16 Jan 2014  

James Angel

Georgetown University - Department of Finance

Douglas M. McCabe

Georgetown University - Department of Management

Date Written: January 14, 2014

Abstract

Individuals and businesses make billions of payments every day in various forms. Payers have choices about what forms of payment they will make, and payees also have some flexibility on what they will accept. Different forms of payment involve different costs and benefits for both the payer and the payee. Can it be unethical to use a particular form of payment? Can a payment system like bitcoin be “evil,” as charged by Krugman (2013)? Or does it provide a means for a more trustworthy means of payment? What are the ethical implications of paying workers with one form of payment, such as a fee-laden payroll card, over another? What are the ethical implications of choosing a payment tool, such as a rewards credit card, that imposes higher costs on the merchant? The differential nature of bargaining power between the users and operators of the dominant payment networks also raise ethical questions regarding the fairness of charges in such asymmetric power situations. A payment system, like any tool, is not “evil” by itself; it is the use that matters.

Keywords: Financial ethics, payments; interchange fees, debit cards, credit cards, payment cards, scrip, exploitation, bitcoin

JEL Classification: E42

Suggested Citation

Angel, James and McCabe, Douglas M., The Ethics of Payments: Paper, Plastic, or Bitcoin? (January 14, 2014). Available at SSRN: https://ssrn.com/abstract=2379233 or http://dx.doi.org/10.2139/ssrn.2379233

James J. Angel (Contact Author)

Georgetown University - Department of Finance ( email )

McDonough School of Business
Washington, DC 20057
United States
202-687-3765 (Phone)
202-687-4031 (Fax)

Douglas M. McCabe

Georgetown University - Department of Management ( email )

3700 O Street, NW
Washington, NY 20057
United States

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