Nonbanks in the Payments System: Innovation, Competition, and Risk




Nonbanks are becoming increasingly prominent in payments systems around the world. What are the implications of this heightened presence for innovation, competition, and risk? This international conference brought together three principal audiences - industry participants, academics, and public authorities - for an exchange of views and thoughts. The following issues were addressed:
  • What activities do banks and nonbanks perform in payments?
  • How has rising nonbank participation affected product innovation and market competition in the payments industry?
  • Do banks and nonbanks compete on a level playing field?
  • Is the current supervisory framework over bank and nonbank payment service providers adequate to control risk?
  • What role should public authorities play in overseeing retail payments in light of changing technologies and changing industrial structures?

The conference was held at the La Fonda Hotel, May 2-4, 2007, in Santa Fe, New Mexico. Papers, remarks, handouts, and a listing of conference attendees are available below for viewing.



2007 Conference Program 

Conference Summary  Richard J. Sullivan
Senior Economist, Federal Reserve Bank of Kansas City
  Zhu Wang
Senior Economist, Federal Reserve Bank of Kansas City
Welcome and
Opening Remarks
Richard K. Rasdall, Jr.
First Vice President, Federal Reserve Bank of Kansas City
 
Session 1: Nonbank Payment Activities: An Overview
| Paper | Handout | General Discussion |

Authors Simonetta Rosati 
Senior Market Infrastructure Expert, European Central Bank
  Stuart E. Weiner 
Vice President and Director of Payments System Research, Federal Reserve Bank of Kansas City
 
Session 2: Innovation
| Paper | Handout | General Discussion |

Author Bronwyn Hall
Professor, University of California, Berkley
Moderator Lee Manfred | Remarks | Handout
Partner, First Annapolis
Panelists Benjamin Ling | Remarks | Handout
Head of Google Checkout, Google
  Rene Pelegero | Remarks | Handout
Senior Director of Industry Relations, Strategy and Compliance, PayPal, Inc.
  Margaret Weichert | Remarks | Handout
Senior Vice President, Strategy, Innovation, and Payments Executive, Bank of America
   
Luncheon Address: Modernizing Payments: No Pain, No Gain
| Paper | General Discussion |

Gertrude Tumpel-Gugerell
Member of the Executive Board, European Central Bank
 
Session 3: Competition: Vertical Integration
| Introduction | PaperGeneral Discussion |

Author Nicholas Economides
Professor, New York University
Moderator Kenneth Posner | Handout
Managing Director, Morgan Stanley
Panelists Michael A. Cook | Remarks | Handout
Vice President and Assistant Treasurer, Wal-Mart Stores, Inc.
  Trey Jinks | Remarks | Handout
Senior Director, Corporate Strategy and Planning, TSYS
  Pamela A. Joseph | Remarks | Handout
Vice Chair, U.S. Bancorp
 
Session 4: Competition: Horizontal Integration
| Paper | General Discussion |

Author Jean-Charles Rochet
Professor, University of Toulouse
Moderator Ken Howes | Remarks | Handout
Director, Edgar, Dunn & Company
Panelists B.J. Haasdijk | Remarks | Handout
Chairman, Equens
  Gerard Hartsink | Remarks | Handout
Chairman, European Payments Council
  David Yates | Remarks
President, Europe, Middle East, and Africa, First Data International 
 
Session 5: Risk
| Paper | Handout | General Discussion |

Author Ross Anderson
Professor, Cambridge University
Moderator Avivah Litan | Remarks
Vice President and Distinguished Analyst, Garnter, Inc.
Panelists Jean Bruesewitz | Remarks
Senior Vice President, Visa U.S.A.
  Roy C. DeCicco | Remarks | Handout
Senior Vice President, JPMorgan Chase
  Richard Oliver | Remarks | Handout
Executive Vice President, Federal Reserve Bank of Atlanta
  James Van Dyke | Remarks | Handout 
President, Javelin Strategy and Research
 
Session 6: Central Bank Perspectives
| General Discussion |

Speakers Philip Klopper | Remarks | Handout
Executive Director, De Nederlandsche Bank
  Philip Lowe | Remarks
Assistant Governor, Reserve Bank of Australia
  Thomas M. Hoenig | Remarks
President and Chief Executive Officer, Federal Reserve Bank of Kansas City
 

Conference Attendees