Cost Savings from Electronic Payments and Atms in Europe

FRB of Philadelphia Working Paper No. 03-16

29 Pages Posted: 18 Aug 2004

See all articles by David B. Humphrey

David B. Humphrey

Florida State University - Department of Finance

Date Written: August 2003

Abstract

Electronic payments are considerably cheaper than their paper-based alternatives. Similarly, ATMs are a more cost-efficient way to deliver certain depositor services than are branch offices. As the share of electronic payments in 12 European countries rose from 0.43 in 1987 to 0.79 in 1999 and ATMs expanded while the number of branch offices was constant, bank operating costs are estimated to be $32 billion lower than they otherwise might have been, saving 0.38% of the 12 nations' GDP. The authors' results are robust to the form of cost function estimated - composite, Fourier, or translog.

Keywords: Payments, ATM, bank costs, Europe

JEL Classification: E41, C53

Suggested Citation

Humphrey, David B., Cost Savings from Electronic Payments and Atms in Europe (August 2003). FRB of Philadelphia Working Paper No. 03-16. Available at SSRN: https://ssrn.com/abstract=572481 or http://dx.doi.org/10.2139/ssrn.572481

David B. Humphrey (Contact Author)

Florida State University - Department of Finance ( email )

Tallahassee, FL 32306-1042
United States
850-644-7899 (Phone)
850-668-6696 (Fax)

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