The Payments System Research function is responsible for monitoring and analyzing domestic and international payments system developments. Following is the department's latest work.

Payments System Research News

Journal Article

"Payment Card Interchange Fees and Merchant Service Charges--An International Comparison" (Published in the Lydian Payments Journal, vol. 1, Issue 3 - January 2010 (PDF 1.91M, see p. 6-22)) This article by Fumiko Hayashi also discusses factors that are important for interchange fee debate, including the total number of card transactions, cardholder fees and card frauds.

December Briefing

An Update on Interchange Legislation in the United States This article by Christian Hung provides a summary of recent developments in interchange legislation in the United States as well as the recently released Government Accountability Office report detailing its findings on interchange fees.

The Changing Retail Payments Landscape: What Role for Central Banks?

An international payments policy conference hosted by the Federal Reserve Bank of Kansas City Nov. 9-10, 2009, explored the changing retail payments landscape and assessed the role of central bank policies in this quickly evolving area. Participants included industry representatives, policymakers, academics and other payments system stakeholders.

Working Paper

Spin-offs: Theory and Evidence This paper provides a "passive learning" model of firm entry by spin-off and predicts a high correlation between spin-offs and parent exit. The theoretical findings are tested and confirmed on a unique data set of the U.S. automobile industry. Product Innovation and Firm Survival in the U.S. ATM and Debit Card Network Industry This paper studies product innovation and network survival in the U.S. ATM/debit card industry. Why Do Card Issuers Charge Proportional Fees? This paper explains why payment card companies charge consumers and merchants fees which are proportional to the transaction values instead of charging a fixed per-transaction fee. The Economics of Two-Sided Payment Card Markets: Pricing, Adoption and Usage This paper provides a new theory to explain pricing, adoption and usage in two-sided payment card markets.

Briefing Articles

A Backward Glance While Looking Forward This article takes a backward glance at some of the early emerging payments nearly a decade after their introduction and examines their status today and where they may be heading. International Remittances This article by Terri Bradford describes some of the means by which individuals remit funds internationally--informal networks, money transfer operators, financial institutions and other options--and discusses some of the factors that may influence the choice of provider. Developments in Merchant Acquiring This article by Terri Bradford and Christian Hung discusses the origin and roles of merchant acquiring; the models for acquiring; and relevant developments in legislation, PCI compliance, and the Single Euro Payments Area. Developments in Interchange Fees in the United States and Abroad This article by Terri Bradford and Fumiko Hayashi provides an update on developments in interchange fees in the United States and recent public authority involvement in interchange fees abroad.

Books

A Guide to the ATM and Debit Card Industry: 2006 Update This 2006 update by Fumiko Hayashi, Richard J. Sullivan, and Stuart E. Weiner documents a number of important developments in patterns and trends in the ATM and debit card industry since their work was first published in 2003.