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Moving Money

The Future of Consumer Payment

edited by Robert E. Litan and Martin Neil Baily

Publication Year: 2009

Once we paid for things with bills, coins, or checks. Today we pay with zeroes and ones —digital entries on credit and debit cards, or electronic messages sent over the Internet. In Moving Money, distinguished analysts explore this trend, its development and likely future, and the ramifications of this transformation.

This is a book about money as a medium of exchange —in the past, in the present, but particularly in the future. What forms has money taken over the years? Moreover, how have those means of payment changed in recent years, and how will they develop in the future? And what (if anything) should policymakers do to facilitate those changes, or at least allow them to develop and mature? Brookings economists Robert E. Litan and Martin Neil Baily and a distinguished group of experts dissect these issues and peer into the future of consumer payments.

The landscape of the consumer payments industry will be shaped at least in part by public policies. Historically, governments have had monopolies on the manufacture of money. Any form of payment clearly requires trust on the part of both the seller and the buyer, and the government must establish and enforce laws to secure this relationship. More controversial is the issue of whether, and to what extent, government is also needed to protect the market in private sector payments systems.

Why do these issues matter? The payments industry is a large and important sector of developed economies. In the United States, private-sector payments providers generate approximately $280 billion a year in revenue, while the government invests substantial resources into making money (minting coins and printing bills) or moving it (via checks and various electronic transfers). And the way we pay for things influences our purchases —what we spend money on, how much we spend, and where we spend it. Thus the future of consumer payments is intertwined with the health of national economies.

Contributors: Martin Neil Baily (Brookings), Thomas P. Brown (O'Melveny & Myers), Kenneth Chenault (American Express Company), Vijay D'Silva (McKinsey and Company), Nicholas Economides (New York University), David S. Evans (Market Platform Dynamics), Robert E. Litan (Brookings and Kaufmann Foundation), Drazen Prelec (Massachusetts Institute of Technology), Richard Schmalensee (Massachusetts Institute of Technology)

Published by: Brookings Institution Press

Front Cover

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Title Page

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Copyright Information

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Table of Contents

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Introduction

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pp. 1-18

Money is one of those words with multiple meanings. Economists tell us that it serves as a medium of exchange, or the way in which actors in an economy pay for goods and services. It also is a . . .

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2 Payments in Flux: Megatrends Reshape the Industry

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pp. 19-35

Payments is a complex industry in which change often occurs without warning. Today, three major technology trends could profoundly shift the pace and direction of evolution across the payments . . .

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3 Innovation and Evolution of the Payments Industry

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pp. 36-76

Technological developments involving the Internet, web-based software, wireless communication, computers, and data analytics are coming together in ways that promise to transform how consumers and . . .

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4 Consumer Behavior and the Future of Consumer Payments

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pp. 77-101

A billboard ad for a prepaid long-distance telephone card once ran the slogan “Now you can call your loved ones and not think about how much it costs.” The ad points to a basic dilemma in consumer . . .

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5 The Future of Consumer Payments: An Insider's Perspective

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pp. 102-112

The payments industry that I know is both global and dynamic. It is without a doubt a highly competitive industry, one that is rapidly innovating and evolving. It is an industry that exists in various stages, . . .

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6. Competition Policy Issues in the Consumer Payments Industry

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pp. 113-126

At the completion of a sale, money changes hands. Money changing hands could be in cash or checks, and, for the last few decades, also be in electronically transmitted funds or a guarantee of prompt . . .

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7 Keeping Electronic Money Valuable: The Future of Payments and the Role of Public Authorities

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pp. 127-139

The weekend of September 13–14, 2008, we watched a long simmering financial crisis boil over. One institution that seemed to define financial stability disappeared; another sold itself for . . .

Contributors

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p. 141-141

Index

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pp. 143-150

Back Cover

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E-ISBN-13: 9780815703785
E-ISBN-10: 0815703783

Page Count: 150
Publication Year: 2009