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

Göran Bergendahl and Ted Lindblom

The Service Industries Journal, 2007, vol. 27, issue 6, 687-707

Abstract: 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.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:taf:servic:v:27:y:2007:i:6:p:687-707

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DOI: 10.1080/02642060701453148

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The Service Industries Journal is currently edited by Eileen Bridges, Professor Domingo Ribeiro, Ronald Goldsmith, Barry Howcroft and Youjae Yi

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