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New Means Of Payment: New Risks?

New Means Of Payment: New Risks?

The efficiency with which payments are made is a question bearing a double macroeconomic challenge. First of all, the commercial and financial relations which agents establish must not be hampered or slowed down by obstacles which would oppose the regulations which they imply. It would not be acceptable for a dysfunction, or even a blocking of payments, to impede the smooth running of economic transactions.

To this imperative of good routing of payments must be added a collective requirement of productive efficiency whose dimension should not be underestimated. It is indeed necessary to be aware of the resources mobilized in the organization of payments. For example, the cost of producing payments for the United States economy is estimated at around 3% of GDP. Under these conditions, it is easy to understand that innovations in the field of retail payments are potential vectors of significant resource savings at the macroeconomic level. For example, the abandonment of paper payments in favor of electronic payments could reduce the overall cost of producing payments from a third to half of what it is today  [2]

In addition to these productivity objectives, the all-round innovations that are being demonstrated today in the payment systems of industrialized countries are likely to better meet the new needs of agents for carrying out their transactions. Internet payments are the perfect example. Satisfying these new needs is moreover certainly more complex than we had imagined some time ago as evidenced by the very many failures that innovative solutions have had to face. At the same time as the “good” models will gradually be selected by the demands of the actors of the payment systems, new economic logics will take shape. In some cases, digital technologies will be the source of major strategic changes in the mass payments market.

The banks are already affected in their strategic choices because they have to select and sell these new means of payment to a generally cautious clientele. To do this, they are led to establish new partnerships and to expose themselves to increasing technical and commercial risks. Even more radical will be the changes linked to the growing intrusion of non-bank firms in the production of payments. Simple technical partners, confined to a subcontracting relationship, these commercial or industrial firms can become real competitors of the banks. This interference is assessed according to a gradation which should be identified in outline. In particular, it can result, in extreme cases,

It is clear that these economic developments will result in the emergence of new risks and perhaps in the resurgence of old risks. These risks will relate to providers of payment solutions and therefore their customers. The purpose of this contribution is to identify these risks. The idea that is exposed here is that technological progress can be an additional risk factor only when they modify the economic organization of payments. It seems to us that the most spectacular risks such as fraud or technical failure of systems are basically more easily controllable than other risks linked to the dilution of the role of banks in the organization of payments.

Mechanisms, however, limit this risk-taking, the role of regulatory authorities is of course from this crucial point of view. It seems to us that the public contributes in these consumer choices to indirectly support the authorities in risk control. Agents are probably characterized by a payment processing for high risk aversion and only value innovations that meet new needs, leaving aside most of the other emerging offers. We must therefore ask ourselves what is really expected from innovations in the field of retail payments. Are there expected gains – and still hypothetical today – that would compensate for additional risk taking, thereby giving them some rationality?

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