Retail payments: New contributions,empirical results,and unanswered questions

We offer a selected survey of retail payments and suggest areas where additional research would prove useful. After summarizing eight papers presented at a recent Norges Bank (Central Bank of Norway) payment conference and published in this volume, we show how they, and many of the other papers presented there, have contributed to the payments literature. We also illustrate how institutional and other differences across countries led to different payment arrangements historically which now, due to technological innovation affecting bank costs, have made payment arrangements across countries more homogeneous.     

移动支付产业变迁趋势及政策建议

支付是经济活动链条中的重要环节,承担着资金划拨和转移的基础性功能。随着 现代信息通信技术的发展,电子商务的持续渗透,“互联网+”等各项政策的利好推动,以移 动支付为代表的新兴电子支付方式迅速兴起,成为促进消费、便利民生的推动力量。在演进历 程方面,现代化支付体系建设为移动支付奠定基础,电子商务发展助推远程支付方式普及,线 上线下融合的商业模式推动了移动支付迅猛发展。本文结合当前移动支付市场情况,从监管政 策、行业格局、技术创新等角度提出了移动支付产业发展趋势,以及促进移动支付产业健康发 展的相关政策建议。     

A Risk Model with Multilayer Dividend Strategy

Abstract

In recent years various dividend payment strategies for the classical collective risk model have been studied in great detail. In this paper we consider both the dividend payment intensity and the premium intensity to be step functions depending on the current surplus level. Algorithmic schemes for the determination of explicit expressions for the Gerber-Shiu discounted penalty function and the expected discounted dividend payments are derived. This enables the analytical investigation of dividend payment strategies that, in addition to having a sufficiently large expected value of discounted dividend payments, also take the solvency of the portfolio into account. Since the number of layers is arbitrary, it also can be viewed as an approximation to a continuous surplus-dependent dividend payment strategy. A recursive approach with respect to the number of layers is developed that to a certain extent allows one to improve upon computational disadvantages of related calculation techniques that have been proposed for specific cases of this model in the literature. The tractability of the approach is illustrated numerically for a risk model with four layers and an exponential claim size distribution.     

Introduction to Retail Payments: Mapping Out the Road Ahead

This article introduces four papers that were presented at a payments conference “Retail Payments: Mapping Out the Road Ahead,” which was held at De Nederlandsche Bank in Amsterdam in April of 2016. These papers focus on various behavioral aspects of consumers and merchants in their choice and acceptance of payment instruments and payment activity. End-user behavior has implications for how the retail payment landscape is likely to evolve and, therefore, will need to be considered by policymakers charged with overseeing the development of retail payments.     

Sequential payments and optimal pricing in payment systems

This paper studies the intraday payment behaviour between heterogeneous banks as well as optimal intraday pricing schemes. The paper shows the social optimality of payment sequencing, which allows a bank to delay payments until the bank receives payments from the counterparty. The payment sequencing allows a bank with high liquidity cost to ‘recycle’ payment inflow from another bank with lower liqudity cost, reducing the aggregate cost of funding of banks to settle all payments. But we also see that the banks have an incentive to delay payments more than the payment sequencing requires. This underscores the importance of social planner’s role reducing settlement delay, while leaving socially efficient payment sequencing. In this context, we compare two different pricing schemes, a standard throughput guideline and a time-varying intraday tariff, to discuss the optimal incentive mechanisms in payment systems for the ‘socially efficient sequential settlement’.     

Banks’ intraday liquidity management during operational outages: Theory and evidence from the UK payment system

We investigate how settlement banks in the United Kingdom’s large-value payment system deal with intraday liquidity and operational risk. In particular, we are interested in payments behaviour towards a bank that is, for operational reasons, unable to make but able to receive payments. If other banks did not sufficiently monitor their outgoing payments, these operational shocks could impact the entire payment system because the affected bank could absorb liquidity from the system. Our game-theoretic model predicts that only early in the day, when they are uncertain about the payment instructions they might have to execute, banks stop sending payments to a counterparty which is unable to make payments. Using a non-parametric method, we find that this prediction is supported by the data, implying that banks effectively contain the disruption caused by the operational outage: payment flows between healthy banks remain unaffected.     

What is in it for us? Network effects and bank payment innovation

The developed world exhibits substantial but poorly understood differences in the efficiency and quality of low value payment services. This paper compares payment arrangements in the UK, Norway, Sweden, and Finland, and discusses the impact of network effects on incentives to adopt new payments technology. A model is presented, in which private benefits for investment in shared inter-bank payments infrastructure are weak. In contrast, due to ‘account externalities’, there are strong incentives for investment in intra-bank payment systems. These two features, distinguishing bank payments from other network industries, can help explain some of the observed cross-country differences in payment arrangements.     

The impact of mobile payment on payment choice

This paper investigates the effect of mobile payment on the adoption and use of traditional payment instruments such as cash, checks, and credit, debit and prepaid cards at the point of sale (POS). Data are from a 2012 representative survey on consumer payment choice in the United States. Using discrete-choice random utility models to simulate consumer behavior, the estimation provides two major findings. First, mobile payment does not replace physical payment cards, but is likely to substitute for paper-based payment methods such as cash and checks at the adoption stage. Second, mobile payment does not statistically significantly influence the choice of payment means at the POS in terms of usage. However, there is suggestive evidence that it is complementary to card payments and a substitute for paper-based payment instruments. The findings highlight the potential social welfare gains of mobile payment and provide key insights into challenging issues for the private industry sector. This paper furthermore offers novel evidence on the impact of mobile payment on the use and adoption of existing payment instruments and contributes to the literature on consumer payment choice.     

Dividend Policies and Price-Volume Reactions to Cash Dividends on the Stock Market: Evidence from the Istanbul Stock Exchange

This study examines the effects of cash dividend payments on stock returns and trading volumes in the stock market. It also investigates whether there is any difference in the investment behavior of investors with respect to the dividend pay out ratio and size in the Istanbul Stock Exchange (ISE)from 1995 to 2003. Prices start to rise a few sessions before cash dividend payments, and on the ex-dividend day, they fall less than do dividend payments, finally decreasing in the sessions following the payment. Trading volume shows a considerable upward shift before the payment date and, interestingly, is stable after Thus, cash dividends influence prices and trading volumes in different ways before, at, and after payment, providing some profitable active trading strategy opportunities around the ex-dividend day. The findings support price-volume reaction discussions on the divident payment date and the significant effect of cash dividends on the stock market.     

The development of digital payments – Past,present, and future – From the literature

We seek to deepen and increase knowledge on the evolution of scholarship regarding digital payments by highlighting the main interpretative strands in the literature and the changes, if any, in research approaches. Using bibliometric and scientometric measures, we explore research hotspots and developmental trends in digital payments to identify influential aspects of published contributions and research streams. Our sample consists of 723 articles published between 1985 and 2021 obtained from the Web of Science. The results show that the most investigated digital payments are mobile payments, with the main analysis methodologies typically linked to technology adoption models. This review, original in terms of sample size and methodology, advances knowledge on the evolution of innovative payments and guides scholars in visualising various research models.     

What determines the financing decision in corporate takeovers: Cost of capital,agency problems,or the means of payment?

How is a takeover bid financed and what is its impact on the expected value creation of the takeover? An analysis of the sources of transaction financing has been largely ignored in the takeover literature. Using a unique dataset, we show that external sources of financing (debt and equity) are frequently employed in takeovers involving cash payments. Acquisitions with the same means of payment but different sources of transaction funding are in fact quite distinct. Acquisitions financed with internally generated funds significantly underperform those financed with debt. The takeover financing decision is influenced by the bidder's pecking order preferences, its growth potential, and its corporate governance environment, all of which are related to the cost of external capital. The choice of equity versus internal cash or debt financing also depends on the bidder's strategic preferences with respect to the means of payment.     

A SIMPLE FORMULA FOR DURATION

This paper presents a simplification of Macaulay's formula for duration. The derivation treats any bond as a portfolio of a coupon bearing bond at par and a zero-coupon bond. The resultant equations are simple to use and show how coupon payments, premiums, and discounts affect duration. The equations are easily modified without loss of simplicity for various coupon payment intervals and for calculations between payment periods.     

支付方式与收购公司财富效应

股权分置改革之后,股票支付成为我国上市公司并购的主要支付工具之一。本文以股改后并购事件为研究对象,采用事件研究法来实证检验收购公司在并购首次公告期间的财富效应,且分别检验不同支付方式下的财富效应差异。结果表明,股改之后并购为收购公司股东创造了正的财富效应,股票支付的收购公司所取得的超常收益显著为正,且显著大于现金支付所获得的超常收益。超常收益的影响因素分析发现一些交易特征对收购公司超常收益有显著的影响。     

The Check's in the Mail: Why the United States Lags in the Adoption of Cost-Saving Electronic Payments

The United States payment system costs around $225 billion annually and checks account for 75% of all noncash payments. Other electronic payment methods (debit cards, automated clearing house direct deposits, and debits) cost only around one third to one half as much as a check. This paper outlines the main reasons why the shift from checks to cheaper electronic payments has been slow, much slower here than in other countries. We also forecast the future use of checks and electronic payments and end by discussing policy initiatives that may speed up this substitution process.     

Aligning managed care contracts, compensation plans, and incentive models

Today's pure production-based compensation and incentive models are lagging behind new, third-party, "value based" payment models, such as shared savings, bundled payments, and pay for performance. Financial executives are struggling with the emerging disconnects between new, external payment models and traditional methods providers use to distribute funds internally. To begin to align internal payment models with emerging third-party payment models, providers should inventory the misaligned incentives within their own organizations, engage their physicians and payers in a dialogue on what needs to be paid and how, and learn from past mistakes. No perfect payment distribution model exists. Rather, providers should choose a best-fit model based on their market position, culture, and readiness for change. Ultimately, finance executives should take the lead in aligning their organization's internal and external payment models.     

Durables, nondurables, down payments and consumption excesses

We examine a model that generalizes the standard buffer-stock model of saving to accommodate durables, nondurables, down payment requirements, and adjustment costs in the durables market. We find that nondurable consumption becomes more volatile relative to income as down payments decrease at the individual and at the aggregate level. Moreover, for plausible parameter values, the model can explain the excess smoothness and excess sensitivity observed in U.S. aggregate data. The result follows from a gradual adjustment of consumption to permanent income shocks when agents attempt to spread out the burden of down payments over time, compounded by slow adjustment due to transaction costs.     

Explaining cross-border large-value payment flows: Evidence from TARGET and EURO1 data

We analysed the distribution of the TARGET cross-border interbank payment flows from both a cross-section and a time-series point of view using average daily data for the period 1999–2002. Our findings were, first, that “location matters” in the sense that bilateral payment flows seem to reflect an organisation of interbank trading between countries in which the size of the banking sector, geographic proximity and cultural similarities play a significant role. This result was also confirmed by a model developed drawing on the gravity models literature. Second, we found that the payment traffic in TARGET is strongly affected by technical market deadlines. In addition, such traffic is positively related mainly to the liquidity conditions and to the turnover of the euro area money market (particularly the unsecured overnight segment). Our model also provides a good explanation of the determinants of the interbank payments settled in the EURO 1 system.     

非金融支付领域金融消费权益保护研究

近年来,我国非金融支付机构发展快速,为消费者提供了更加高效、便捷的服务,传统意义上以银行为主的支付结算服务得以不断延伸和拓展,弥补了银行服务的不足。随着非金融支付机构竞争加剧,非金融支付服务行业的快速发展与非金融支付领域金融消费权益保护不相匹配的矛盾日益显现,非金融支付领域金融消费权益保护工作需引起关注。     

Determinants of earnout as acquisition payment currency and bidder’s value gains

We examine the wealth effects of a comprehensive sample of UK bidders offering contingent payment, or earnout, as consideration for their acquisitions. We show that bidders using earnout generate significantly higher announcement and post-acquisition value gains than bidders using non-earnout currencies (such as cash, stock exchange, or mixed payments). We construct a logistic model to predict when it is optimal for a bidder to offer earnout. We show that bidders offering earnout optimally enjoy significantly higher announcement and post-acquisition gains than bidders offering non-earnout currencies, consistent with our model of the choice of the optimal method of payment. Overall, we provide robust evidence that earnout is an effective payment mechanism to mitigate valuation risk to acquirers, and also enhances acquirer value during the announcement and post-acquisition periods. Our paper contributes to the broader literature on how corporate acquirers use payment currency to manage information asymmetry and the attendant valuation risk.     

Target Firm Returns: Does the Form of Payment Affect Abnormal Returns?

Research indicates that at the time of a takeover announcement, target firm shareholders receiving cash earn larger abnormal returns than those receiving stock. Our work confirms that cash targets receive larger direct payments from bidders and that the size of target firm abnormal returns is related to the relative size of this direct payment. Once we control for the size of the payment, however, we find the target firm abnormal returns to be unrelated to the payment method. Thus the relationship between payment method and target firm abnormal returns is indirect. This finding is important because it casts doubt on the signaling (asymmetric information) hypothesis. That is, cash offers do not seem to be valued by the market as a means of reducing this uncertainty. Something else, such as the tax implication differences between cash and stock offers, drives cash target firms to demand larger payments from bidding firms.