The Dutch Banking Chipcard Game

Henk de Vries and George Hendrikse

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: The banks in the Dutch chipcard market initially agreed on one chipcard system. One system is attractive for companies as well as consumers. Companies, banks and retailers, prevent costs of duplication, while consumers enjoy the benefits of a widespread acceptance of one card and do not face uncertainty regarding the chipcard standard. Two standards could harm the development of the chipcard market. However, one bank withdrew from the initial agreement and introduced its own chipcard system in December 1995. This has resulted in a costly battle between the two banking chipcard standards, duplication costs for retailers, the introduction of a gateway technology in order to establish compatibility for users, and low market acceptance of the chipcards. March 2001, after a struggle of more than five years, the banks decided to return to one chipcard. The rationality of the decision to withdraw, despite the prospect that everybody may be worse off, will be analyzed from the perspective of game theory and the theory regarding standards battles.

Keywords: Banking; chipcard; electronic purse; game theory; standardization (search for similar items in EconPapers)
JEL-codes: E51 L2 M M10 (search for similar items in EconPapers)
Date: 2001-03-22
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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