New Horizons in Money and Finance series
Edited by Luisa Anderloni, David T. Llewellyn and Reinhard H. Schmidt
Chapter 6: How do Internet Payments Challenge the Retail Payment Industry?
* David Bounie and Pierre Gazé INTRODUCTION 1 Since the mid-1980s, the role of money and banks has been aﬀected by various innovations. The rapid development of ﬁnancial markets, new behaviours in terms of investments and new modes of ﬁnancing and so on have transformed the ﬁnancial sphere. These signiﬁcant changes have taken place in a context of ﬁnancial globalisation, an internationalisation of payments and a mutation of monetary systems which have gradually imposed new rules for payment systems. All these transformations have aﬀected the orientation and control of monetary policy, which has become increasingly diﬃcult to implement as the concept of money becomes harder to deﬁne. In the context of a changing monetary system, the current electronisation of retail payment systems provides a new set of challenges for banking and monetary authorities. Faced with the ongoing transformation of the payment environment through the development of electronic face-to-face transactions (vending machines and so on) and electronic remote transactions (the internet, wireless networks), numerous product innovations have appeared, including electronic purses, electronic payment systems on the internet and mobile payments. Among these innovations, the development of electronic payment systems on the internet is probably at the origin of the most surprising developments. Numerous electronic payment systems have been conceived by institutions, other than banks, as a way of contesting the bank monopoly on payment instruments. Some innovative payment instruments are now competing with traditional payment instruments (for example, the payment card) for speciﬁc payment services. In...
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