The Effect of Transaction Pricing on the Adoption of Electronic Payments: A Cross-Country Comparison.

28 Pages Posted: 22 Dec 2005

See all articles by Wilko Bolt

Wilko Bolt

De Nederlandsche Bank (Dutch Central Bank); VU University Amsterdam

David B. Humphrey

Florida State University - Department of Finance

Roland Uittenbogaard

Bank of the Netherlands - Research Department

Date Written: November 2005

Abstract

Pricing should speed up the substitution of low cost electronic payments for expensive paper-based transactions and cash. But by how much? Norway has explicitly priced individual payment transactions and rapidly shifted to electronic payments while the Netherlands has experienced the same shift without direct pricing. Controlling for differences between countries, the authors estimate the incremental effect of pricing on the shift to electronic payments. If users strongly value the improved convenience or security of electronic payments, pricing - viewed negatively by most consumers - may not be necessary to ensure rapid adoption of electronic payments.

Keywords: Electronic payments, Transaction pricing, Demand elasticity, Social benefits

JEL Classification: D12, G21

Suggested Citation

Bolt, Wilko and Humphrey, David B. and Uittenbogaard, Roland, The Effect of Transaction Pricing on the Adoption of Electronic Payments: A Cross-Country Comparison. (November 2005). FRB Philadelphia Working Paper No. 05-28. Available at SSRN: https://ssrn.com/abstract=871102 or http://dx.doi.org/10.2139/ssrn.871102

Wilko Bolt (Contact Author)

De Nederlandsche Bank (Dutch Central Bank) ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

David B. Humphrey

Florida State University - Department of Finance ( email )

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

Roland Uittenbogaard

Bank of the Netherlands - Research Department ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands

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