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The Demand for Stored Value Payment Instruments

Ingo Pippow () and Schoder Detlef
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Schoder Detlef: Institute for Computer Sciences & Social Studies Freiburg

Microeconomics from University Library of Munich, Germany

Abstract: Due to their functionality, stored value purses based on smart card technology are prominent candidates for being the dominant medium of exchange for micropayments. However, the overall prospects of these payment systems are yet ambiguous, both from the perspective of practice and monetary theory, because their potential to substitute for cash is still largely unknown. As a contribution to the field, a model is proposed founding the potential utilization of stored value cards in microeconomic calculus. As a result, the model provides insight into the crucial parameters determining usage. Moreover, the model suggests that issuers should maximize demand and profits by offering interest payments or insurance against loss.

Keywords: Electronic Money; Stored Value; Digital Payment Instruments; Monetary Theory; Demand for Money (search for similar items in EconPapers)
JEL-codes: E40 E41 E50 O30 (search for similar items in EconPapers)
Date: 2002-04-19
Note: Type of Document - Tex; prepared on IBM PC - PC-TEX; pages: 10; figures: included
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Handle: RePEc:wpa:wuwpmi:0204002