Back
to Table of Contents
Today, a lot of emerging electronic payment methods -- smart card, digital cash, encrypted credit card payment and electronic check -- are going to change current payment systems dramat ically. Though these new payment methods may make payments easier, cheaper, and more accu rate, they would change the power game and relationships between the participants -- companies, consumers, banks and credit card companies. Among them, the impact on banks can be enor mous. The new payment systems would eliminate some functions traditionally conducted by banks. For example, consumers do not have to bring cash with them to make a small purchase by using a smart card. On the other hand, banks would lose the opportunity to get a transaction charge on a settlement. In addition, new players -- credit card companies and other new players such as software and telephone companies -- would join the new payment systems. This means banks are going to lose their privilege - settlement of transactions. On the other hand, competent banks could leverage these opportunities. These dynamic changes in payment systems will take place in different ways depending on the situations, which we divided into three relationships between the entities who join -
(1) transactions between individuals,
(2) transactions between consumers and companies,
(3) transac tions between companies.
In each case, we will research how the electronic payment methods change the current payment systems, focusing on the impact on banks.