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Payment instrument choice: the case of prepaid cards

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  • Sujit Chakravorti
  • Victor Lubasi

Abstract

The costs and benefits to payment system participants can differ depending on which payment mechanism is used. The authors specifically explore the costs and benefits of prepaid card applications versus other payment instruments, such as cash, checks, and debit cards, for certain payment segments, including gift, payroll, and employer-initiated and government benefit programs.

Suggested Citation

  • Sujit Chakravorti & Victor Lubasi, 2006. "Payment instrument choice: the case of prepaid cards," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 30(Q II), pages 29-43.
    • Handle: RePEc:fip:fedhep:y:2006:i:qii:p:29-43:n:v.30no.2
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    References listed on IDEAS

    as
    1. Humphrey, David B., 2004. "Replacement of cash by cards in US consumer payments," Journal of Economics and Business, Elsevier, vol. 56(3), pages 211-225.
    2. Sujit Chakravorti & Emery Kobor, 2003. "Why invest in payment innovations?," Emerging Issues, Federal Reserve Bank of Chicago, issue Jun.
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    6. Shy, Oz & Tarkka, Juha, 2002. "The Market for Electronic Cash Cards," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 299-314, May.
    7. Sujit Chakravorti & Carrie Jankowski, 2005. "Forces shaping the payments environment: a summary of the Chicago Fed’s 2005 Payments Conference," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Oct.
    8. Elizabeth Klee, 2005. "Paper or Plastic? The Effect of Time on Check and Debit Card Use at Grocery Stores," Computing in Economics and Finance 2005 348, Society for Computational Economics.
    9. Sujit Chakravorti & Erin Davis, 2004. "An electronic supply chain: will payments follow?," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Sep.
    10. Leo Van Hove, 2004. "Cost-based Pricing of Payment Instruments: the State of the Debate," De Economist, Springer, vol. 152(1), pages 79-100, March.
    11. Gene Amromin & Carrie Jankowski & Richard D. Porter, 2006. "Inducing more efficient payment on the Illinois Tollway," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Apr.
    12. Stacey L. Schreft, 1997. "Looking forward : the role for government in regulating electronic cash," Economic Review, Federal Reserve Bank of Kansas City, vol. 82(Q IV), pages 59-84.
    13. Victor Lubasi, 2005. "Debit card competition: signature versus pin," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Dec.
    14. Chakravorti, Sujit & To, Ted, 2007. "A theory of credit cards," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 583-595, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Wilko Bolt & Sujit Chakravorti, 2008. "Economics of payment cards: a status report," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 32(Q IV), pages 15-27.
    2. Carrie Jankowski & Richard D. Porter & Tara N. Rice, 2007. "Against the tide—currency use among Latin American immigrants in Chicago," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 31(Q II), pages 2-21.
    3. Marc BOURREAU & Marianne VERDIER, 2010. "Cooperation for Innovation in Payment Systems: The Case of Mobile Payments," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(79), pages 95-114, 3rd quart.
    4. Helmi Hamdi, 2007. "Some Ambiguities Concerning the Development of Electronic Money," Financial Theory and Practice, Institute of Public Finance, vol. 31(3), pages 293-307.
    5. Wilko Bolt & Sujit Chakravorti, 2011. "Pricing in Retail Payment Systems: A Public Policy Perspective on Pricing of Payment Cards," DNB Working Papers 331, Netherlands Central Bank, Research Department.
    6. Gene Amromin & Sujit Chakravorti, 2007. "Debit card and cash usage: a cross-country analysis," Working Paper Series WP-07-04, Federal Reserve Bank of Chicago.
    7. Wilko Bolt & Sujit Chakravorti, 2008. "Economics of payment cards: a status report," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 32(Q IV), pages 15-27.
    8. Wilko Bolt & Sujit Chakravorti, 2010. "Digitization of Retail Payment," DNB Working Papers 270, Netherlands Central Bank, Research Department.
    9. Ronald J. Mann, 2011. "Adopting, using, and discarding paper and electronic payment instruments: variation by age and race," Public Policy Discussion Paper 11-2, Federal Reserve Bank of Boston.
    10. Santiago Carbó-Valverde & Sujit Chakravorti & Francisco Rodríguez-Fernández, 2009. "Regulating two-sided markets: an empirical investigation," Working Paper Series WP-09-11, Federal Reserve Bank of Chicago.
    11. Khouja, Moutaz & Zhou, Jing, 2015. "Channel and pricing decisions in a supply chain with advance selling of gift cards," European Journal of Operational Research, Elsevier, vol. 244(2), pages 471-489.

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