Distributed Ledger Technology (DLT) is out to change our future. Its scope is not limited to tokenizing physical objects. In the case of Central Bank Digital Currencies (hereinafter, CBDCs), they can change the way we look at money, one of the earliest inventions of humanity. As soon as digital asset trading evolved into a market, developers started releasing digital wallets for their storage. While these attempts are the recognition of users’ needs, their technical level still leaves some space for improvements. Among CBDC related issues, the development of a secure wallet infrastructure is gaining recognition as one way to solve key problems like ensuring equal access to banking facilities. Also, it can offer a novel way to approach digital identity and other functional problems connected to digital assets. Whenever we are executing a financial transaction, its consequences are not restricted to the monetary realm: issues about fair competition, ownership, and management of our personal information come into play. An infrastructure is needed to protect and support our digital rights. Technology is ready to support the development of a secure Universal Access Device (UAD), a single key tool for protecting and representing us, and the organization for supporting it from a network. This paper aims to explore the arising legal and economic issues following the adoption of UADs.
{"title":"The Importance of Where Central Bank Digital Currencies Are Custodied: Exploring the Need of a Universal Access Device","authors":"R. Barresi, Filippo Zatti","doi":"10.2139/ssrn.3691263","DOIUrl":"https://doi.org/10.2139/ssrn.3691263","url":null,"abstract":"Distributed Ledger Technology (DLT) is out to change our future. Its scope is not limited to tokenizing physical objects. In the case of Central Bank Digital Currencies (hereinafter, CBDCs), they can change the way we look at money, one of the earliest inventions of humanity. \u0000 \u0000As soon as digital asset trading evolved into a market, developers started releasing digital wallets for their storage. While these attempts are the recognition of users’ needs, their technical level still leaves some space for improvements. Among CBDC related issues, the development of a secure wallet infrastructure is gaining recognition as one way to solve key problems like ensuring equal access to banking facilities. Also, it can offer a novel way to approach digital identity and other functional problems connected to digital assets. \u0000 \u0000Whenever we are executing a financial transaction, its consequences are not restricted to the monetary realm: issues about fair competition, ownership, and management of our personal information come into play. An infrastructure is needed to protect and support our digital rights. Technology is ready to support the development of a secure Universal Access Device (UAD), a single key tool for protecting and representing us, and the organization for supporting it from a network. This paper aims to explore the arising legal and economic issues following the adoption of UADs.","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"199 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115946974","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In The Curse of Cash, Kenneth Rogoff lists reductions in criminal activity and tax evasion among the primary benefits of eliminating cash. We maintain that, to the extent that individuals are interested in purchasing illicit goods and services or evading taxes, eliminating cash will encourage them to switch to close substitutes. Hence, governments intent on realizing the benefits cited by Rogoff would not merely need to eliminate cash. They would also need to ban alternatives. This is especially relevant given the proliferation of cryptocurrencies, which provide a fair degree of anonymity for users.
{"title":"Cash, Crime, and Cryptocurrencies","authors":"Joshua R. Hendrickson, William J. Luther","doi":"10.2139/ssrn.3331347","DOIUrl":"https://doi.org/10.2139/ssrn.3331347","url":null,"abstract":"In The Curse of Cash, Kenneth Rogoff lists reductions in criminal activity and tax evasion among the primary benefits of eliminating cash. We maintain that, to the extent that individuals are interested in purchasing illicit goods and services or evading taxes, eliminating cash will encourage them to switch to close substitutes. Hence, governments intent on realizing the benefits cited by Rogoff would not merely need to eliminate cash. They would also need to ban alternatives. This is especially relevant given the proliferation of cryptocurrencies, which provide a fair degree of anonymity for users.","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"76 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-02-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126715094","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Department of Justice’s theory of liability in its case attacking the non-discrimination provisions in American Express’s merchant acceptance contends that point-of-sale competition on the price of making a purchase with a credit card is an instrument creating economic efficiency. That is, the economy would run more efficiently, and consumers would be better off, if merchants were free to charge variable prices for different types of credit cards. After all, charging different prices for using different types of payment mechanisms appears to be just another form of presumptively positive price competition. The Second Circuit rejected that conclusion, recognizing that in credit card markets competition already occurs at multiple points. American Express must compete to: • convince cardholders to apply for and use its cards; and • convince merchants to accept its cards. The question, the Second Circuit correctly recognized, is whether adding a third type of competition – for cardholders to use the card when merchants pass through their card acceptance fees – would make American Express’s card network more efficient? By prohibiting merchants who accept American Express cards from discriminating against the brand, the card company imposed a unilateral vertical restraint. Such restraints are often deemed to be reasonable under the antitrust laws because they may “stimulate inter-brand competition.” This is because an upstream provider, like American Express, has little interest in reducing its downstream sales. It would only impose a vertical restraint if that restraint efficiently helped it to sell more products. Only when an upstream or downstream provider has market power enabling it to impose restraints that harm consumers by raising price or lowering quality does a vertical restraint violate the antitrust laws. The Department of Justice’s theory postulated that the non-discrimination provisions in American Express’s merchant agreements harmed consumers by effectively requiring merchants to increase their prices to cover higher credit card fees for all customers because merchants could not pass the cost of accepting American Express directly to American Express’s own customers. The Second Circuit acknowledged the potential for consumer harm would exist if American Express charged merchants supra-competitive prices and pocketed the excess as rents. But the court held that the government failed to prove that rivalry on the price consumers pay to use a credit card at the point of sale would increase efficiency in credit card markets. As the Second Circuit explained, credit card markets are two-sided. In order to prove harm to consumer welfare in a two-sided market, an antitrust plaintiff needs to show that a restraint makes the overall system less efficient. That is, do consumers overall pay more for less because of the restraint. A card network like American Express must compete for both cardholders and merchants. One therefore cannot demonstrat
{"title":"Assessing the Competitive Effects of Surcharging the Use of Payment Mechanisms","authors":"Steven Semeraro","doi":"10.2139/SSRN.3148050","DOIUrl":"https://doi.org/10.2139/SSRN.3148050","url":null,"abstract":"The Department of Justice’s theory of liability in its case attacking the non-discrimination provisions in American Express’s merchant acceptance contends that point-of-sale competition on the price of making a purchase with a credit card is an instrument creating economic efficiency. That is, the economy would run more efficiently, and consumers would be better off, if merchants were free to charge variable prices for different types of credit cards. After all, charging different prices for using different types of payment mechanisms appears to be just another form of presumptively positive price competition. The Second Circuit rejected that conclusion, recognizing that in credit card markets competition already occurs at multiple points. American Express must compete to: • convince cardholders to apply for and use its cards; and • convince merchants to accept its cards. The question, the Second Circuit correctly recognized, is whether adding a third type of competition – for cardholders to use the card when merchants pass through their card acceptance fees – would make American Express’s card network more efficient? By prohibiting merchants who accept American Express cards from discriminating against the brand, the card company imposed a unilateral vertical restraint. Such restraints are often deemed to be reasonable under the antitrust laws because they may “stimulate inter-brand competition.” This is because an upstream provider, like American Express, has little interest in reducing its downstream sales. It would only impose a vertical restraint if that restraint efficiently helped it to sell more products. Only when an upstream or downstream provider has market power enabling it to impose restraints that harm consumers by raising price or lowering quality does a vertical restraint violate the antitrust laws. The Department of Justice’s theory postulated that the non-discrimination provisions in American Express’s merchant agreements harmed consumers by effectively requiring merchants to increase their prices to cover higher credit card fees for all customers because merchants could not pass the cost of accepting American Express directly to American Express’s own customers. The Second Circuit acknowledged the potential for consumer harm would exist if American Express charged merchants supra-competitive prices and pocketed the excess as rents. But the court held that the government failed to prove that rivalry on the price consumers pay to use a credit card at the point of sale would increase efficiency in credit card markets. As the Second Circuit explained, credit card markets are two-sided. In order to prove harm to consumer welfare in a two-sided market, an antitrust plaintiff needs to show that a restraint makes the overall system less efficient. That is, do consumers overall pay more for less because of the restraint. A card network like American Express must compete for both cardholders and merchants. One therefore cannot demonstrat","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"74 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115961732","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Technological evolution triggers changes in market demands, inviting the incumbents of the financial infrastructure to innovate and enhance time and cost efficiency. In a world of internet-based services without sovereign barriers and global peer-to-peer networks, the current account-based infrastructure seems outdated and overcomplicated. Distributed Ledger Technology (DLT) introduces a different logic for validation, settlement and record-keeping and provides a promising prospect of modernization of payment services. Major players of payment, clearing and settlement services and central banks are investing in DLT envisaging high-tech, resilient and time-efficient payment systems. This paper provides an analysis of the potential of distributed ledger technology to reconfigure payment services by introducing changes in different parts of the value chain. Its objective is to connect this potential with current legal and technological developments and conceptualize the future of payment services. Part A provides an overview of current payment, clearing and settlement systems in the context of both domestic and cross-border transactions and stresses the multiple levels of intermediation, as well as the externalities for end-users. Part B seeks to explain why Distributed Ledger Technology bears promises for a more efficient payment services infrastructure and how payments are executed, settled and recorded. Part C explores different scenarios under which Distributed Ledger Technology could be used to enhance payment services. These range from complete disintermediation and a “payments democracy” to the scenario that payment and settlement systems remain intact and DLT is used solely to enhance internal record-keeping or financial telecommunications. This part seeks to connect the hypotheses for the adoption of DLT in payment services with recent developments and investments in innovation and technology. Part D focuses on one of the aforementioned scenarios. Academics and regulators are investigating the plausibility of a regulated distributed ledger, where banks will serve as nodes and will continue providing services to their clients. This part discusses the advantages of this idea, as well as the regulatory and scalability requirements to make it feasible. Part E presents efficiencies and implications of a regulated distributed ledger providing payment services from a payment economics perspective. Governance issues and legal implications (data protection, enforceability of private law rights, systemic risks) are not part of this analysis.
{"title":"Distributed Ledger Technology and the Future of Payment Services","authors":"E. Karaindrou","doi":"10.2139/ssrn.3078523","DOIUrl":"https://doi.org/10.2139/ssrn.3078523","url":null,"abstract":"Technological evolution triggers changes in market demands, inviting the incumbents of the financial infrastructure to innovate and enhance time and cost efficiency. In a world of internet-based services without sovereign barriers and global peer-to-peer networks, the current account-based infrastructure seems outdated and overcomplicated. \u0000Distributed Ledger Technology (DLT) introduces a different logic for validation, settlement and record-keeping and provides a promising prospect of modernization of payment services. Major players of payment, clearing and settlement services and central banks are investing in DLT envisaging high-tech, resilient and time-efficient payment systems. \u0000This paper provides an analysis of the potential of distributed ledger technology to reconfigure payment services by introducing changes in different parts of the value chain. Its objective is to connect this potential with current legal and technological developments and conceptualize the future of payment services. \u0000Part A provides an overview of current payment, clearing and settlement systems in the context of both domestic and cross-border transactions and stresses the multiple levels of intermediation, as well as the externalities for end-users. \u0000Part B seeks to explain why Distributed Ledger Technology bears promises for a more efficient payment services infrastructure and how payments are executed, settled and recorded. \u0000Part C explores different scenarios under which Distributed Ledger Technology could be used to enhance payment services. These range from complete disintermediation and a “payments democracy” to the scenario that payment and settlement systems remain intact and DLT is used solely to enhance internal record-keeping or financial telecommunications. This part seeks to connect the hypotheses for the adoption of DLT in payment services with recent developments and investments in innovation and technology. \u0000Part D focuses on one of the aforementioned scenarios. Academics and regulators are investigating the plausibility of a regulated distributed ledger, where banks will serve as nodes and will continue providing services to their clients. This part discusses the advantages of this idea, as well as the regulatory and scalability requirements to make it feasible. \u0000Part E presents efficiencies and implications of a regulated distributed ledger providing payment services from a payment economics perspective. Governance issues and legal implications (data protection, enforceability of private law rights, systemic risks) are not part of this analysis.","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126905718","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cryptocurrencies such as bitcoin or ethereum are gaining ground not only as alternative modes of payment, but also as platforms for financial innovation, particularly through token sales (ICOs). All of these ventures are based on decentralized, permissionless blockchain technology whose distinguishing characteristics are their openness to, and the formal equality of, participants. However, recent cryptocurrency crises have shown that these architectures lack robust governance frameworks and are therefore prone to patterns of re-centralization: they are informally dominated by coalitions of powerful players within the cryptocurrency ecosystem who may violate basic rules of the blockchain community without accountability or sanction. Against this background, this paper makes two novel contributions. First, it suggests that cryptocurrency and token-based ecosystems can be fruitfully analyzed as complex systems that have been studied for decades in complexity theory and that have recently gained prominence in financial regulation, too. It applies these insights to three key case studies: the Bitcoin Hard Fork of 2013; the Ethereum hard fork of 2016, following the DAO hack; and the ongoing Bitcoin scaling debate. Second, the paper argues that complexity-induced uncertainty can be reduced, and elements of stability and order strengthened, by adapting a corporate governance framework to blockchain-based organizations: cryptocurrencies, and decentralized applications built on top of them via token sales. Most importantly, the resulting “comply or explain” approach combines transparency and accountability with the necessary flexibility that allows cryptocurrency developers to continue to experiment for the sake of innovation. Eventually, however, the coordination of these activities may necessitate the establishment of an “ICANN for blockchains”.
{"title":"Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Organizations","authors":"P. Hacker","doi":"10.2139/ssrn.2998830","DOIUrl":"https://doi.org/10.2139/ssrn.2998830","url":null,"abstract":"Cryptocurrencies such as bitcoin or ethereum are gaining ground not only as alternative modes of payment, but also as platforms for financial innovation, particularly through token sales (ICOs). All of these ventures are based on decentralized, permissionless blockchain technology whose distinguishing characteristics are their openness to, and the formal equality of, participants. However, recent cryptocurrency crises have shown that these architectures lack robust governance frameworks and are therefore prone to patterns of re-centralization: they are informally dominated by coalitions of powerful players within the cryptocurrency ecosystem who may violate basic rules of the blockchain community without accountability or sanction. \u0000 \u0000Against this background, this paper makes two novel contributions. First, it suggests that cryptocurrency and token-based ecosystems can be fruitfully analyzed as complex systems that have been studied for decades in complexity theory and that have recently gained prominence in financial regulation, too. It applies these insights to three key case studies: the Bitcoin Hard Fork of 2013; the Ethereum hard fork of 2016, following the DAO hack; and the ongoing Bitcoin scaling debate. Second, the paper argues that complexity-induced uncertainty can be reduced, and elements of stability and order strengthened, by adapting a corporate governance framework to blockchain-based organizations: cryptocurrencies, and decentralized applications built on top of them via token sales. Most importantly, the resulting “comply or explain” approach combines transparency and accountability with the necessary flexibility that allows cryptocurrency developers to continue to experiment for the sake of innovation. Eventually, however, the coordination of these activities may necessitate the establishment of an “ICANN for blockchains”.","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"67 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126032394","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Despite the ubiquity of credit cards, it was not until the mid-1990s that a large share of lower-income Americans gained access to these useful financial products, which enable cost-saving consumer purchases, small business financing, and economic inclusion. High credit card debt, of course, can cause individual harm, and on the aggregate, booming household debt levels are a serious policy concern. Yet credit card balances account for just 6 percent of U.S. household debt levels, and as a share of disposable personal income fell from nearly 8 percent in the mid-2000s to 5.3 percent in 2015. We identify regressive trends driving decreased card usage, including that between 2007 and 2015, origination to lower-score accounts (generally lower-income consumers) fell 50 percent, and average credit card lines for these accounts shrunk 31 percent, likely forcing down card utilization. Lower-income Americans increasingly lack credit cards.
Consumer credit demand, however, remains high, particularly among lower-income Americans. Supply-side factors – including:
(1) a 250 percent rise in credit card regulatory restrictions by financial regulators;
(2) bans on risk-based pricing;
(3) a rising share of unbanked Americans; and
(4) unpredictable Consumer Financial Protection Bureau (CFPB) actions – are likely constraining lower-score Americans’ access to credit cards, revealing a tension between consumer financial protection and financial product access.
Yet recent regulatory activity has at best only modestly improved customer experiences with credit cards, likely because Americans have historically used cards quite reasonably and expressed satisfaction with these products. We examine how regressive trends in credit card access will likely force consumers into more expensive credit products, hurt small business financing, and impede economic mobility, while also cautioning against high consumer debt levels. We conclude by recommending that policymakers act to curtail unintended regulatory impacts on credit card access by:
(1) repealing some unnecessary restrictions on risk-based credit card pricing brought about by the CARD Act;
(2) reforming the CFPB to better balance consumer protection with consumer financial product access; and
(3) streamlining banking regulations to decrease the number of unbanked Americans.
{"title":"Out of Reach: Regressive Trends in Credit Card Access","authors":"Marshall Lux, R. Greene","doi":"10.2139/ssrn.3597180","DOIUrl":"https://doi.org/10.2139/ssrn.3597180","url":null,"abstract":"Despite the ubiquity of credit cards, it was not until the mid-1990s that a large share of lower-income Americans gained access to these useful financial products, which enable cost-saving consumer purchases, small business financing, and economic inclusion. High credit card debt, of course, can cause individual harm, and on the aggregate, booming household debt levels are a serious policy concern. Yet credit card balances account for just 6 percent of U.S. household debt levels, and as a share of disposable personal income fell from nearly 8 percent in the mid-2000s to 5.3 percent in 2015. We identify regressive trends driving decreased card usage, including that between 2007 and 2015, origination to lower-score accounts (generally lower-income consumers) fell 50 percent, and average credit card lines for these accounts shrunk 31 percent, likely forcing down card utilization. Lower-income Americans increasingly lack credit cards.<br><br>Consumer credit demand, however, remains high, particularly among lower-income Americans. Supply-side factors – including: <br><br>(1) a 250 percent rise in credit card regulatory restrictions by financial regulators; <br><br>(2) bans on risk-based pricing; <br><br>(3) a rising share of unbanked Americans; and <br><br>(4) unpredictable Consumer Financial Protection Bureau (CFPB) actions – are likely constraining lower-score Americans’ access to credit cards, revealing a tension between consumer financial protection and financial product access. <br><br>Yet recent regulatory activity has at best only modestly improved customer experiences with credit cards, likely because Americans have historically used cards quite reasonably and expressed satisfaction with these products. We examine how regressive trends in credit card access will likely force consumers into more expensive credit products, hurt small business financing, and impede economic mobility, while also cautioning against high consumer debt levels. We conclude by recommending that policymakers act to curtail unintended regulatory impacts on credit card access by:<br><br>(1) repealing some unnecessary restrictions on risk-based credit card pricing brought about by the CARD Act; <br><br>(2) reforming the CFPB to better balance consumer protection with consumer financial product access; and <br><br>(3) streamlining banking regulations to decrease the number of unbanked Americans.","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128323525","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This congressional testimony summarizes the effects on consumers and the economy of Dodd-Frank, the Durbin Amendment the Consumer Financial Protection Bureau, and other government regulations (such as the CARD Act of 2009) enacted in the wake of the recent financial crisis. The testimony notes that the combined effect of these laws and regulations has resulted in higher bank fees, a dramatic reduction in access to free checking, an increase in the number of unbanked consumers, a dramatic reduction in access to credit cards for low-income consumers, and continued low access to mortgages, especially among lower-income and higher-risk borrowers. In addition, because of the crushing and disproportionate burden of Dodd-Frank’s regulations on smaller banks, the law has promoted consolidation of the banking industry and forced many smaller banks to exit certain product markets, especially mortgages. This combined effect has reduced choice and competition for consumers. Finally, the lack of democratic accountability over the CFPB has resulted in an agency defined by bureaucratic overreach, resulting in an invasive and reckless data-mining project and assertion over many industries and products that stand outside of the agency’s authorized jurisdiction.
{"title":"The Dodd-Frank Act Five Years Later: Are We Freer?","authors":"Todd J. Zywicki","doi":"10.2139/SSRN.2704076","DOIUrl":"https://doi.org/10.2139/SSRN.2704076","url":null,"abstract":"This congressional testimony summarizes the effects on consumers and the economy of Dodd-Frank, the Durbin Amendment the Consumer Financial Protection Bureau, and other government regulations (such as the CARD Act of 2009) enacted in the wake of the recent financial crisis. The testimony notes that the combined effect of these laws and regulations has resulted in higher bank fees, a dramatic reduction in access to free checking, an increase in the number of unbanked consumers, a dramatic reduction in access to credit cards for low-income consumers, and continued low access to mortgages, especially among lower-income and higher-risk borrowers. In addition, because of the crushing and disproportionate burden of Dodd-Frank’s regulations on smaller banks, the law has promoted consolidation of the banking industry and forced many smaller banks to exit certain product markets, especially mortgages. This combined effect has reduced choice and competition for consumers. Finally, the lack of democratic accountability over the CFPB has resulted in an agency defined by bureaucratic overreach, resulting in an invasive and reckless data-mining project and assertion over many industries and products that stand outside of the agency’s authorized jurisdiction.","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"83 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129468865","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Following in the footsteps of the man whose name is associated with the Forty Thieves, and whose immortal words gave him access to the treasure, the twenty-first century’s Alibaba found his pot of gold in Chinese consumer with his 'Open Sesame': the protection that Alipay delivers to consumers. By offering an escrow service, Alipay accounts for approximately half of the online payment transactions in China, becoming the biggest threat to China’s banks in the state-backed financial industry. This article aims to discover how Alipay drives Alibaba’s growth by analysing current consumer protection issues in China, Alipay’s legal character and its consumer redress. It also examines why Chinese banks’ triple advantages, i.e., state support, public trust and monopoly status failed to help them secure their share in Chinese online market. China’s announcement of the final drafting of The Deposit Guarantee (Insurance) Scheme indicates that opening up the Chinese financial market completely is only a matter of time. How to win back the trust of consumers and compete with both domestic and foreign finance institutions are currently the biggest challenges facing the banks in China. Alibaba’s success demonstrates that harnessing consumer trust is the main source of its increasing market power.
{"title":"Consumer Protection as the 'Open Sesame' that Allows Alibaba to Crush the Forty Thieves (Gaining Market Power by Protecting Consumers: A Private Company Blows China's Banks Away)","authors":"Ying Yu, Mingnan Shen","doi":"10.2139/SSRN.2572941","DOIUrl":"https://doi.org/10.2139/SSRN.2572941","url":null,"abstract":"Following in the footsteps of the man whose name is associated with the Forty Thieves, and whose immortal words gave him access to the treasure, the twenty-first century’s Alibaba found his pot of gold in Chinese consumer with his 'Open Sesame': the protection that Alipay delivers to consumers. By offering an escrow service, Alipay accounts for approximately half of the online payment transactions in China, becoming the biggest threat to China’s banks in the state-backed financial industry. This article aims to discover how Alipay drives Alibaba’s growth by analysing current consumer protection issues in China, Alipay’s legal character and its consumer redress. It also examines why Chinese banks’ triple advantages, i.e., state support, public trust and monopoly status failed to help them secure their share in Chinese online market. China’s announcement of the final drafting of The Deposit Guarantee (Insurance) Scheme indicates that opening up the Chinese financial market completely is only a matter of time. How to win back the trust of consumers and compete with both domestic and foreign finance institutions are currently the biggest challenges facing the banks in China. Alibaba’s success demonstrates that harnessing consumer trust is the main source of its increasing market power.","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115871955","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Kenya, the first market for Telco-led payments systems, through the use of mobile, to be successful. As a result, other payments systems such as crypto payment system Bitcoin see Kenya as a market worth investing in. This paper analyzes how M-PESA gained traction in a payment system that was bank led. The paper looks at the journey M-PESA took to effectively break into a market normally the preserve of banking. The paper further makes recommendations and provides steps for Bitcoin and other payments systems to follow to enter the payments market in Kenya. This paper is a roadmap for payment services providers with an interest in Kenya’s local and international money remittance business from the lessons I learnt while working in Safaricom, as Counsel for M-PESA.
{"title":"The Pleasures and Perils of New Money in Old Pockets; M-PESA and Bitcoin in Kenya","authors":"Diana Sirila","doi":"10.2139/SSRN.2490111","DOIUrl":"https://doi.org/10.2139/SSRN.2490111","url":null,"abstract":"Kenya, the first market for Telco-led payments systems, through the use of mobile, to be successful. As a result, other payments systems such as crypto payment system Bitcoin see Kenya as a market worth investing in. This paper analyzes how M-PESA gained traction in a payment system that was bank led. The paper looks at the journey M-PESA took to effectively break into a market normally the preserve of banking. The paper further makes recommendations and provides steps for Bitcoin and other payments systems to follow to enter the payments market in Kenya. This paper is a roadmap for payment services providers with an interest in Kenya’s local and international money remittance business from the lessons I learnt while working in Safaricom, as Counsel for M-PESA.","PeriodicalId":175183,"journal":{"name":"LSN: Payment Systems (Sub-Topic)","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116693162","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Sergei Koulayev, Marc Rysman, Scott D. Schuh, J. Stavins
The way that consumers make payments is changing rapidly and attracts important current policy interest. This paper develops and estimates a structural model of adoption and use of payment instruments by U.S. consumers. We use a cross-section of data from the Survey of Consumer Payment Choice, a new survey of consumer behavior. We evaluate substitution and income effects. Our simulations shed light on the consumer response to the 2011 regulation of interchange fees on debit cards imposed by the Dodd-Frank Act, as well as the proposed settlement between Visa and MasterCard and the Department of Justice that would allow merchants to surcharge the use of payment cards.
消费者支付的方式正在迅速变化，并吸引了当前重要的政策关注。本文开发并估计了美国消费者采用和使用支付工具的结构模型。我们使用了消费者支付选择调查的横截面数据，这是一项关于消费者行为的新调查。我们评估了替代效应和收入效应。我们的模拟揭示了消费者对2011年《多德-弗兰克法案》(Dodd-Frank Act)规定的借记卡交换费规定的反应，以及Visa和万事达(MasterCard)和司法部(Department of Justice)之间拟议的和解协议，该协议将允许商家对支付卡的使用收取额外费用。
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