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Costs and Benefits of Building Faster Payment Systems: The UK Experience

Author

Listed:
  • Claire Greene

    (Federal Reserve Bank of Atlanta)

  • Marc Rysman

    (Boston University)

  • Scott Schuh

    (West Virginia University)

  • Oz Shy

Abstract

A number of countries have implemented faster payment services that allow consumers and businesses to rapidly transfer money between bank accounts. These services compete with slower, existing payment services. In 2008, the United Kingdom implemented its Faster Payments Service (FPS) at a cost of less than ₤200 million (.014 percent of U.K. GDP, or $307 million) spread over seven years, plus investment costs borne by each participating bank to connect to the FPS. This paper examines the economic cost-benefit analysis underlying the U.K. FPS investment decision and describes the subsequent diffusion and use of FPS through 2014.

Suggested Citation

  • Claire Greene & Marc Rysman & Scott Schuh & Oz Shy, 2018. "Costs and Benefits of Building Faster Payment Systems: The UK Experience," Working Papers 18-07, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:18-07
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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1003&context=econ_working-papers
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    References listed on IDEAS

    as
    1. Borzekowski, Ron & Kiser, Elizabeth K., 2008. "The choice at the checkout: Quantifying demand across payment instruments," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 889-902, July.
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    More about this item

    Keywords

    fast payments systems; cost-benefit analysis; account-to-account (A2A) transfers; person-to-person (P2P) payments; faster payments;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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