Faster Payments: Market Structure and Policy Considerations

41 Pages Posted: 29 Sep 2017

See all articles by Aaron Rosenbaum

Aaron Rosenbaum

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Garth Baughman

Board of Governors of the Federal Reserve System

Mark D. Manuszak

Board of Governors of the Federal Reserve System

Kylie Stewart

Board of Governors of the Federal Reserve System

Fumiko Hayashi

Federal Reserve Bank of Kansas City

Joanna Stavins

Federal Reserve Bank of Boston

Multiple version iconThere are 3 versions of this paper

Date Written: September, 2017

Abstract

The U.S. payments industry is in the process of developing ubiquitous, safe, faster electronic solutions for making a broad variety of business and personal payments. How this market for faster payments will evolve will be shaped by a range of economic forces, such as economies of scale and scope, network effects, switching costs, and product differentiation. Emerging technologies could alter these forces and lead to new organizational arrangements or market structures that are different from those in legacy payment markets to date. In light of this uncertainty, this paper examines three hypothetical market structures that may emerge: a dominant-operator environment, a multi-operator environment, and a decentralized environment. Each of these market structures has different implications for the public policy objectives of efficiency, safety, and ubiquity. The paper also considers tools to promote positive outcomes in each market structure.

JEL Classification: D4, G2, L1, E42

Suggested Citation

Rosenbaum, Aaron and Baughman, Garth and Manuszak, Mark D. and Stewart, Kylie and Hayashi, Fumiko and Stavins, Joanna, Faster Payments: Market Structure and Policy Considerations (September, 2017). FEDS Working Paper No. 2017-100, Available at SSRN: https://ssrn.com/abstract=3044344 or http://dx.doi.org/10.17016/FEDS.2017.100

Aaron Rosenbaum (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Garth Baughman

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Mark D. Manuszak

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Kylie Stewart

Board of Governors of the Federal Reserve System

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Fumiko Hayashi

Federal Reserve Bank of Kansas City ( email )

1 Memorial Dr.
Kansas City, MO 64198
United States

Joanna Stavins

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States
617-973-4217 (Phone)
617-973-4218 (Fax)

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