Pricing of card payment services in Scandinavian banking: a comment

Willesson [(2009). Pricing of card payment services in Scandinavian banking. The Service Industries Journal, 29(3), 387–399] purports to demonstrate that when it comes to pricing of card payment services, Scandinavian banks with foreign operations will typically align themselves with the ‘pricing tradition’ in their foreign market(s). Unfortunately, a problem with Willesson's approach is that for several banks in his sample the foreign pricing tradition happens to coincide with the pricing strategy that the bank uses in its home market. As a result, it is impossible to determine whether these banks have really opted for a strategy of national responsiveness.     

Reply to: pricing of card payment services in Scandinavian banking: a comment,by Leo Van Hove

A comment on the previously published paper ‘Pricing of card payment services in Scandinavian banking’ has been written by Leo Van Hove and published in this issue of The Service Industries Journal; it suggests alternative analytical approaches and other implications of the results. This reply develops the study further, providing new presentations of the empirical data and discussing its conclusions. The suggestions and approaches provided by Van Hove do not change the conclusions drawn in the paper, and in-depth implications of the results in a wider context are outside the scope of the paper. However, this reply proposes further empirical studies regarding the pricing of card payment services.     

Cost efficiency among credit card banks

Credit card banks produce a single, relatively homogeneous output, permitting exceptionally clean empirical tests of cost efficiency. The high net interest margins and fees on credit card loans also suggests a large potential for managerial slack or expense preference behavior, possibly fostering a wider range of cost efficiency than observed for general-purpose banks. This paper presents estimates of cost efficiency for a sample of monoline credit card banks over the period 1984–1993; the findings are similar to those previously reported for general-purpose banks. We also explore empirical correlates of the estimated cost efficiency.     

Retailers and their relationships with their financial services suppliers: the case of debit card charges in the United Kingdom

The mid 1990s has seen a very rapid growth in both the holding and use of debit cards in the UK. There are now just over 27 million debit cards issued in the UK under the marques Switch and Visa Delta. Debit card transactions immediately debit the account of the card holder. These transactions are acquired by a financial institution (the acquirer), who reimburses the retailer of the purchase sum minus a negotiated fee, the merchant service charge (MSC). In the UK the MSC is a fixed fee per transaction as opposed to credit card transactions that are levied as a percentage of the transaction value. The level of the fixed fee payments vary enormously from just a few pence for large corporate clients to anything up to 80 p for some small independent retailers. The authors of this paper were commissioned to undertake a research programme into retailer attitudes to card payment systems. This paper will outline the main implication of the research in terms of marketing the acquiring service to retailers and consequent relationship between acquirer and retailer. Relationship marketing can be seen as a return to a more traditional method of bank management, in terms of close relationships between banks and businesses. With the development of specialist sections and departments such as card services there may have been a more transactional marketing approach by the banks. Merchant acquirers should focus more attention on retention rather than recruitment and treat each customer as an individual. Factors other than price and technology, for example quality and customer service, should be emphasized to protect themselves from competition and to encourage long term customer loyalty.     

Who Pays for Credit Cards?

The authors model side payments in a competitive credit‐card market. If competitive retailers absorb the cost of accepting credit cards by charging a higher goods price to everyone, then someone must subsidize convenience users of credit cards to prevent them from defecting to merchants who do not accept cards. The side payment could be financed by card users who roll over balances and pay interest. It is rational for them to do so if their subjective discount rates are high enough. Charging different prices to different customers based on the underlying cost of the payment instrument would be more efficient for retailers. However, banks may offer incentives to attract convenience users because some of them may become interest‐paying users (“revolvers”) in the future.     

Smart Card-Based Electronic Card Payment Systems in the Transportation Industry

Many products and services will soon be (or are already being) sold over the Internet or other networks. Paying for these with standard methods of payments, such as cash, checks, credit card, or debit card, may be ineffective or inefficient. For such cases, electronic card payment systems are more appropriate. Several things need to be considered when investigating electronic card payment system options, including: customer needs and benefits, developmental and operational cost, corporate benefits, continually changing technologies, critical mass of customers, security, standards of payment systems, and customer perception and comfort with new technologies. In this article, we analyze how smart card-based systems are used in mass transportation. Managers in mass transportation face the following questions: Do you develop your own electronic card payment system, do you wait for multifunctional cards that will be accepted across many industries to provide the functionality required in your market, or do you do nothing. The discussion here concentrates mainly on the transportation industry, where the transactions and payments are made on local area networks.     

The role of accounting information in revenue management

Revenue management (RM) uses differential pricing and other techniques to manage customer demand for a company's products and services. It judiciously trades off yield and spoilage, and brings rational approaches to pricing for goods and services with a limited shelf life. Because many types of businesses find that growing revenue has a disproportionate impact on operating profits, firms that know and manage their customer base often achieve better bottom-line results by growing revenue rather than by cost-cutting. Initially developed as a marketing tool for pricing airline tickets, today's numerous RM applications can benefit from accounting tools that help assess whether applications will enhance operating profit and monitor their success in doing so. Knowledge of a firm's cost structure, operating leverage in particular, and when to treat RM adjustments as special orders, are the principal accounting lynchpins. Opportunity cost variances and insights from the theory of constraints contribute to effective revenue management/profit enhancement programs. Use of proper accounting information and analytic techniques can help a tolerated union of necessity between RM programs and firm strategy become a desirable marriage of mutual choice.     

Gift card program incrementality and cannibalization: The effect on revenue and profit

Many retailers have not measured the magnitude of cannibalization or its impact on revenue and profit when existing customers use a gift card for purchases they would have made without it, particularly when the card was purchased through a 3rd party at a discount up to 15%. We conducted a survey among gift card redeemers of a national casual dining restaurant chain to determine how the gift card affected their purchase behavior. We used this information, combined with operating margin, to model the impact of three different gift card discount scenarios on firm revenue and profit. Although the revenue effect was positive under all scenarios, the same was not true for profit. The profit was much lower than anticipated, even in the best case scenario, and was negative in the worst case scenario.     

Effects of reduced government deficiency payments on post‐harvest wheat marketing strategies

Effects of reducing government deficiency payments on a wheat producer's post‐harvest marketing strategies are evaluated. The deficiency payment is predicted using an average option pricing model to properly value both intrinsic and time values of the deficiency payment. The biggest loss to producers from reducing deficiency payments is reduced revenue. The deficiency payment program was no better than hedging strategies in reducing post‐harvest risk, and when grain was sold at harvest, it even increased post‐harvest risk. Many producers will compensate for reduced deficiency payments by increasing use of futures or options contracts. For some producers, however, the optimal strategy is to sell wheat at harvest, because of high opportunity cost, storage cost, or risk aversion. © 2000 John Wiley & Sons, Inc. Jrl Fut Mark 20:243–263, 2000     

存款保险定价模型与中国模式选择

本文引进了存款保险定价的期权定价模型和预期损失模型,针对中国现阶段的商业银行经营状况,在预期损失模型的基础上,真实测算了存款保险费率,并建设性地从中国国情出发提出了存款保险费率的基本模式和基于混合方法的拓展模式。最后评价了本文所涉及的存款保险定价模型,并基于实务的角度提出了存款保险费率确定机制。     

公务卡结算方式的探讨

实行公务卡结算方式,可以监督公务消费,强化财务管理,降低管理成本,提高工作效率,实现政府与银行的和谐发展。但公务卡结算方式存在着弊端,公务卡受理环境有待进一步改善,公务卡使用缺乏有效执行力、监督力。应改善消费环境,改变浪费观念,加强财政预算资金的管理和监控,促进现代财政国库管理制度建设,提高政府部门的财务管理效率,从机制上防范和治理腐败,实现公务消费的公开、真实、透明。     

公务卡结算方式的探讨

实行公务卡结算方式,可以监督公务消费,强化财务管理,降低管理成本,提高工作效率,实现政府与银行的和谐发展。但公务卡结算方式存在着弊端,公务卡受理环境有待进一步改善,公务卡使用缺乏有效执行力、监督力。应改善消费环境,改变浪费观念,加强财政预算资金的管理和监控,促进现代财政国库管理制度建设,提高政府部门的财务管理效率,从机制上防范和治理腐败,实现公务消费的公开、真实、透明。     

Pricing of Payment Services: A Comparative Analysis of Paper-based Banking and Electronic Banking

This paper aims at comparing paper-based banking and electronic banking in terms of cost-efficiency and pricing. The focus is primarily on giro payments made manually by mail and electronically via the Internet, but also by cash over the counter. The paper presents principles of efficient pricing in terms of production fees and capacity fees. It also demonstrates that the current pricing of payment services in Norway and Sweden is far away from these principles as production fees are set below marginal costs while capacity fees are in many cases above capacity costs. Such deviations may stimulate customers to an excess demand for electronic payments while paper-based payments will be depressed.     

信息不对称对信用卡市场的影响分析

信用卡产业在我国已步入快速发展的轨道,然而宽松的发卡策略加剧了持卡人和发卡行之间的信息不对称,继而诱发信用卡支付危机。鉴于此,在声誉(KMRW)博弈模型基础上建立了发卡行和持卡人之间的声誉博弈模型,分析了持卡人、发卡行的声誉与信用卡市场上的信息不对称之间的关系,提出引进第三方治理机制作为KMRW模型自我实施机制的加强和补充,以更有效地缓解信用卡市场上的信息不对称。     

借记卡收费的网络视角分析

与国际同业收费标准相比,目前我国借记卡收费属偏低水平。借记卡是一种典型的具有网络效应的产品,其网络价值随着持卡人数和硬件终端分布数量的增多而提高。银行终端系统兼容性的提高在一定程度上降低了持卡人的转换成本,这将对借记卡的市场结构和网络效应的作用形式产生很大影响。银行应提高借记卡服务的差异化,应通过增加投入来进一步完善网络,提高自身的服务水平与效率,通过不断增加客户的效用,进一步发挥网络效应的作用。     

Ladder Pricing – A New Form of Wholesale Price Discrimination

Wholesale ‘ladder pricing’ involves setting the wholesale price a retailer faces as a non-linear (generally increasing) function of the price chosen by that retailer. The special case where the ladder-pricing contract is linear is shown to be equivalent to a form of revenue sharing. Optimal profit maximizing ladder pricing/revenue sharing is examined, given that retailers are privately informed of their demands and costs, and have control over whether they participate, and if so, what retail price they set. The profit performance of the solution is compared with the alternative of wholesale quantity discounting, as the relative level of retailer demand/cost heterogeneity is varied; ladder pricing/revenue sharing tends to outperform quantity discounting by an increasing amount the greater retailer demand heterogeneity is relative to cost heterogeneity. Ladder pricing has recently been implemented for 08 and related calls in UK telecoms and has been subject to extended legal dispute; the case and issues involved are discussed.     

人民币国际计价功能的特点研究

随着中国对外开放程度不断提高,人民币逐渐走出国门,特别是党的十八大以来,人民币加入特别提款权(SDR),其国际货币的地位初步奠定。目前,人民币已成为全球第五大支付货币,全球已有60多个央行或货币当局将人民币纳入外汇储备。本文结合人民币国际计价功能的发展,对其特点进行了具体分析。研究发现:人民币计价功能的区域性特征明显,人民币在国际金融计价中的比重增长较快,增加人民币供给为其实现国际计价功能提供了有力保障,互联网和移动支付是实现人民币计价功能的重要通道。     

完善我国财政转移支付制度研究

转移支付是分税制财政体制的重要组成部分。无论是从分税制理论角度看,还是从我国区域经济非均衡发展实践角度看,均迫切需要建立相应的转移支付制度,以达到各级财政事权与财权匹配统一、促进各地区经济的协调发展、提供均等化的公共服务能力的总体目标。规范的分税制,必须要有与之相配套的财政转移支付制度,否则很难发挥财政调节的作用。建立规范的转移支付制度是一项政策性和技术性很强的系统工程,不仅制度设计本身难度大,在实施过程中还会涉及中央与地方、地方各级政府之间各方利益的重要调整。本研究就目前我国财政发展状况进行分析,就改善我国转移支付的原则、体制设计以及实施等方面的对策问题展开研究。     

Mobile Commerce

Abstract

To Business-to-Consumer (B2C) companies, finding convenient and secure payment methods is crucial. While the most popular payment method in the United States is the credit card, the common methods in Japan are cash on delivery, transfer of payment into bank accounts, and postal money order. The paper presents such issues as why credit card payments have not become the mainstream payment method in Japan, the current situation of other payment methods, and the future mobile trend.     

A replication study of the credit card effect on spending behavior and an extension to mobile payments

Prior research has shown that credit cards increase spending behavior as measured by the willingness to pay (WTP) or basket value. This research aims to replicate the credit card effect and to extend this effect to mobile payments. In four empirical studies, of which three online studies and one lab study (total n = 692), we manipulated payment methods (i.e., cash, credit cards, and mobile payments) and measured spending behavior (i.e., WTP and basket value). Across four studies, we did not replicate the credit card effect on either measure of spending behavior, suggesting the effect in the literature may be inflated or may have been fading away. A meta-analysis of the relevant literature revealed the expected credit card effect but also showed that the credit card effect has become weaker through the years and that this effect is contingent on the location of data collection. We also did not find evidence that the credit card effect extends to mobile payments on either measure of spending behavior in the three online studies. However, we found a significant difference between mobile payments and cash on the basket value measure (but not for the WTP measure) in the lab study. This paper also explored whether the pain of payment or payment convenience may be a mechanism underlying the relationship between payment methods and spending behavior. Although the pain of payment tended to be lower and the payment convenience tended to be higher for mobile payments, these effects did not translate into more spending behaviors.