Economics of Payment Systems

2019-2020
Dit vak wordt in het Engels aangeboden. Omschrijvingen kunnen daardoor mogelijk alleen in het Engels worden weergegeven.

Doel vak

The primary objective is to provide students with a sound understanding
of payment systems and payment markets. The payment landscape is
changing fast: new players, new technologies, and new business models.
How can we assess and evaluate these ongoing changes from an economic
viewpoint? Based on the economics of multi-sided platforms, a 'state of
the art' economic framework is presented and studied.

After following this course, you will be able to:
- understand the economics of payment systems including the role of
multi-sided platform strategies and network effects,
- understand the main drivers of optimal business strategies in the
payment industry and adoption of (new) payment instruments by consumers
and merchants,
- discuss the impact of entry and exit, competition and key innovations
(FinTech players, Adyen, virtual currencies, blockchain, instant
payments,
mobile money, Apple Pay, Google wallet, Uber, etc) on the international
payment landscape and assess critical factors for effective competition
policy and regulation.

Inhoud vak

The global payments industry is going through a period of significant
change. New technologies, higher customer expectations and changing
regulations are creating both opportunities and risks for payment
providers. FinTech players are introducing advanced innovative solutions
in an attempt to get a piece of the 'payment pie'. In particular,
Bitcoin and its ‘blockchain’ algorithm has tapped a nerve in the
financial ecosystem. From an economic perspective, what does this mix of
entry and exit, innovation and regulation mean for the future of
payments and its business models?

Payment economics lies at the intersection of banking, monetary theory,
and industrial organization. Tapping from these areas, this course
analyzes the economic incentives of payment behavior. The course
contains a general introduction to the function, structure and
efficiency of payment systems and markets. Key issues of interest are
pricing, competition, innovation and regulation. Network effects are
also important, and their role – in particular in relation to innovation
– will be studied as well. A workhorse model – based on platform
economics – is analyzed in depth. Central
outline of the 6 study-weeks is:
1. Setting the stage
2. Platform economics and workhorse model
3. Pricing, competition and regulation
4. Innovations, impact of FinTech and cryptocurrencies
5. Guest lectures
6. Future of payment systems and new business models

Onderwijsvorm

Lectures (2 times 2 hours per week) and tutorial (1 time 1 hour per
week). Two guest lectures will be presented by expert practitioners.

Toetsvorm

Written exam (80%; min. grade 5.0) and take home exercises (20%)

Literatuur

Selected research articles and news clippings.

Aanbevolen voorkennis

The recommended knowledge is in line with the entry requirements for the
Master Finance and Master Financial Management as a whole. Undergraduate
level knowledge of mathematics and statistics is recommended.
Undergraduate knowledge of microeconomics is helpful but not necessary.
You are expected to be familiar with STATA and Excel to perform some
basic estimations and regressions.

Algemene informatie

Vakcode E_FIN_EPS
Studiepunten 6 EC
Periode P4
Vakniveau 400
Onderwijstaal Engels
Faculteit School of Business and Economics
Vakcoördinator prof. dr. W. Bolt
Examinator prof. dr. W. Bolt
Docenten prof. dr. W. Bolt

Praktische informatie

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Werkvormen Hoorcollege, Werkgroep
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