Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

Assessing Digital Payment Systems

Posted on | August 29, 2017 | Comments Off on Assessing Digital Payment Systems


In digitally-mediated environments, new forms of currency and payment systems continue to gain public acceptance. Changes in technology, contactless options, and the ease of electronic payments make cash less desirable. While credit cards remain the most popular form of payment with some 70% of the market, other systems are emerging. PayPal, for example, is used for some 15% of online payments.

The major types of payment systems for B2C transactions:
* Payment Cards – Credit, Charge, Debit
* e-Micropayments – less than $5
* Digital Wallets – AliPay, Apple Pay, Samsung Pay
* e-Checking – Representation of a check sent online
* Digital eCash
* Stored Value (Smart Cards, PayPal, Gift Cards, Debit
Cards)
* Net Bank – Digital payments directly from your bank
* Cryptocurrencies – Peer-to-peer blockchain enabled digital coins (Bitcoin, Ethereumm, Dash)

What factors determine the success of a digital payment system? Here is a list of some important criteria to consider when it comes to assessing the viability of a currency/payment system.

* Acceptability – Will merchants accept it?
* Anonymity – Identities and transactions remain private
* Independence – Doesn’t require extra hardware or software
* Interoperability – Works with existing systems
* Security – Reduced risks to payer and payee
* Durability – Not subject to physical damage
* Divisibility – Can be used for large as well as small purchases
* Ease of use – Is it easier to use than a credit card?
* Portability – Easy to carry around
* Uniformity – Bills, coins, and other unites are the same size and shape and value
* Limited supply – Currencies lose value if too abundant [1]

What about payment systems for large transactions between businesses or governments? The major types of payments systems for B2B, B2G or G2G transactions are:

* Electronic Funds Transfer – ACH, SWIFT, CHIPS
* Enterprise Invoice Presentment and Payment (EIPP)
* Wire Transfers – FEDWIRE

The Federal Reserve’s FEDWIRE transfers trillions of US dollars every day and is a major system for facilitating transactions between banks and other financial institutions.

Notes

[1] Types of payment systems and and criteria drawn from “Functions of Money – The Economic Lowdown Podcast Series, Episode 9.” Functions of Money, Economic Lowdown Podcasts | Education Resources | St. Louis Fed. N.p., n.d. Web. 15 July 2017.

Share

© ALL RIGHTS RESERVED


AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Category: democratic political economies, electric money, financial technology, uncategorized
Tags: > > > > >

Comments

Comments are closed.

  • Referencing this Material

    Copyrights apply to all materials on this blog but fair use conditions allow limited use of ideas and quotations. Please cite the permalinks of the articles/posts.
    Citing a post in APA style would look like:
    Pennings, A. (2015, April 17). Diffusion and the Five Characteristics of Innovation Adoption. Retrieved from http://apennings.com/characteristics-of-digital-media/diffusion-and-the-five-characteristics-of-innovation-adoption/
    MLA style citation would look like: "Diffusion and the Five Characteristics of Innovation Adoption." Anthony J. Pennings, PhD. Web. 18 June 2015. The date would be the day you accessed the information. View the Writing Criteria link at the top of this page to link to an online APA reference manual.

  • About Me

    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

    You can reach me at:

    apennings70@gmail.com
    anthony.pennings@sunykorea.ac.kr

    Follow apennings on Twitter

  • About me

  • Writings by Category

  • Flag Counter

  • Pages

  • Calendar

    July 2021
    M T W T F S S
     1234
    567891011
    12131415161718
    19202122232425
    262728293031  

  • Disclaimer

    The opinions expressed here do not necessarily reflect the views of my employers, past or present.