ATM surcharges

The recent spread of ATM surcharges has sparked significant debate among consumers, policymakers, and ATM owners. Much of this debate has focused on the direct costs that surcharges impose on consumers. The use of ATM surcharges, however, also raises broader questions about ATM deployment, customer convenience, and the nature of banking competition.Automated tellers ; Banks and banking - Service charges

Alternative arrangements for the distribution of intraday liquidity

In July 2006, the Federal Reserve will end its provision of free daylight credit to government-sponsored enterprises (GSEs), financial services corporations created by Congress to establish a secondary market in mortgages and other consumer loans. To meet their payments to investors, the GSEs can use a wide variety of alternative funding arrangements. While such arrangements can in theory distribute liquidity efficiently, a decline in the intraday funds in circulation following the Fed's move may lead to some slowing in payments by both the GSEs and commercial banks.Bank liquidity ; Government-sponsored enterprises ; Credit ; Federal funds

Antitrust and payment technologies: commentary

Antitrust law ; Payment systems

Network issues and payment systems

Highways, railroads, pipelines—we see or hear about these types of physical networks almost every day. But information systems, such as the Internet, and payment systems, such as ATMs and credit cards, also involve networks. Hence, understanding the economics of networks and the unique features of network-dependent industries is crucial to modern life. In this article, James McAndrews outlines some of the unique features of network-dependent industries. He also analyzes some related payment-system issues and demonstrates that determining appropriate public policy would be difficult without a knowledge of the economics of payment networks.Payment systems

Liquidity effects of the events of September 11, 2001

Banks rely heavily on incoming payments from other banks to fund their own payments. The terrorist attacks of September 11, 2001, destroyed facilities in Lower Manhattan, leaving some banks unable to send payments through the Federal Reserve's Fedwire payments system. As a result, many banks received fewer payments than expected, causing unexpected shortfalls in banks' liquidity. These disruptions also made it harder for banks to redistribute balances across the banking system in a timely manner. In this article, the authors measure the payments responses of banks to the receipt of payments from other banks, both under normal circumstances and during the days following the attacks. Their analysis suggests that the significant injections of liquidity by the Federal Reserve, first through the discount window and later through open market operations, were important in allowing banks to reestablish their normal patterns of payments coordination.Fedwire ; Electronic funds transfers ; War - Economic aspects ; Bank liquidity ; Payment systems

The Federal Reserve's Primary Dealer Credit Facility

As liquidity conditions in the "repo market"--the market where broker-dealers obtain financing for their securities--deteriorated following the near-bankruptcy of Bear Stearns in March 2008, the Federal Reserve took the step of creating a special facility to provide overnight loans to dealers that have a trading relationship with the Federal Reserve Bank of New York. Six months later, in the wake of new strains in the repo market, the Fed expanded the facility by broadening the types of collateral accepted for loans. Both initiatives were designed to help restore the orderly functioning of the market and to prevent the spillover of distress to other financial firms.Federal Reserve Bank of New York ; Loans ; Financial crises ; Brokers

Personal on-line payments

The swift growth of e-commerce and the Internet has led to the development of a new form of electronic funds transfer—the personal on-line payment—that uses web and e-mail technologies to initiate and confirm payments. This article describes this payment instrument and the trends that have given rise to it. The authors explain that personal on-line payment systems are already providing a convenient alternative to checks, money orders, and cash, and may replace credit cards for some small-scale retail e-commerce. However, issues such as the interoperability of diverse systems and the systems’ inherent risks will continue to be central. The authors also suggest that although personal on-line payment systems are not likely to have a great impact on monetary policy, they do raise regulatory issues associated with consumer rights and protection.Electronic funds transfers ; Electronic commerce ; Payment systems ; Finance, Personal

NETWORK EXTERNALITIES AND SHARED ELECTRONIC BANKING NETWORK ADOPTION

A unique data set is used to examine the determinants of membership in the Yankee 24 shared Automated Teller Machine (ATM) network. Recent work suggests that the presence of demand side network externalities influences the decision to join a network. A model is constructed in which characteristics of the bank and the market affect the value of the network externality. A hazard function is estimated to gauge the strength of these various influences in determining network membership. The results accord with the theoretical model and show that the size of the existing network and the number of expected locations in the network, proxied by the number of branches in a bank's market, are both strong influences on network adoption that are external to the individual bank.Information Systems Working Papers Serie

THE ADOPTION OF INTERORGANIZATIONAL SYSTEMS AND NETWORK EXTERNALITIES: AN ANALYTICAL AND EMPIRICAL STUDY

Recent work in the information systems literature has argued that network externalities, the value of a network created as a by-product of an existing installed base, are a determinant of interorganizational systems (IOSs) adoption. However, almost no empirical studies have reported the impact of network externalities on the adoption of IOSs. As a result, little is known about the extent to which network externalities may influence the adoption and diffusion of IOSs. Using electronic banking as a context, an analytical framework is developed to model the business value of a shared network to a bank that is considering whether to become involved. We show that network externalities, proxied by expected shared network size, as well as the size of banking firms, are major elements of the perceived value of the network. To empirically assess the impact of these elements on the timing of network adoption and validate our analytical model, we estimate a hazard model (also known as duration or failure time model) using the adoption data for Yankee 24, the largest shared electronic banking network in New England. The hazard model approach that explicitly incorporates covariates in the specification of time to adopt is employed to accommodate right-censoring of our observations of adoption times. We find that banks in markets that can generate a larger effective network size and have more depositors served per branch tend to adopt early, while the size of a bank's own branch network decreases the probability of early adoption.Information Systems Working Papers Serie

Where has all the paper gone? Book-entry delivery-against-payment systems

Securities ; Electronic funds transfers ; Payment systems