nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2016‒04‒16
six papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. Chargebacks: another payment card acceptance cost for merchants By Hayashi, Fumiko; Markiewicz, Zach; Sullivan, Richard J.
  2. Are patients and relatives the better innovators? The case of medical smartphone applications By Goeldner, Moritz; Herstatt, Cornelius
  3. The Role of Social Media in Tourism By Tugay ARAT
  4. Underground Railway and Digital Porosity of the City By Oksana Zaporozhets
  5. Substitution between Online and Offline Advertising: Evidence from the Carbonated Soft Drink Industry By He, Xi; Lopez, Rigoberto A.; Liu, Yizao
  6. Which Does Drive Switching Costs in Retail Banking Industry; Openness to Experience or Services Quality? By Mohammad A Al-hawari

  1. By: Hayashi, Fumiko (Federal Reserve Bank of Kansas City); Markiewicz, Zach (Federal Reserve Bank of Kansas City); Sullivan, Richard J. (Federal Reserve Bank of Kansas City)
    Abstract: Although chargebacks are perceived as one of the major cost components for merchants to accept card payments, little research has been conducted on them. To fill that gap, this paper describes the current chargeback landscape by generating detailed statistics on chargebacks for signature-based transactions. Our data are from merchant processors, which, altogether, processed more than 20 percent of all signature-based transactions in the United States. For Visa and MasterCard transactions, chargebacks merchants receive are, on average, 1.6 basis points (bps) of sales number and 6.5 bps of sales value. About 70 to 80 percent of chargebacks are resolved as merchant liability. The most common chargeback reason is fraud, which accounts for about 50 percent of the total chargebacks. The merchant fraud loss rate is 0.7 bps in number and 2.6 bps in value. For American Express and Discover transactions, the total and fraud chargeback rates are somewhat lower. For all of the four networks, the total and fraud chargeback rates are significantly higher for card-not-present transactions than for card-present transactions. They also vary by merchant category. Our fraud results are generally consistent with other available fraud statistics.
    Keywords: Chargebacks; Fraud; Payment cards; Payments
    JEL: E42 L81
    Date: 2016–01–04
  2. By: Goeldner, Moritz; Herstatt, Cornelius
    Abstract: Prior research has shown that users are a valuable resource for identifying new product or service innovations. However, few scholars have analyzed how different user types such as intermediate and end users are interacting along the value chain of an emerging new product and how they contribute to innovation. Further, user innovation success in the market is often unclear, since very few innovations diffuse directly to customers from the user innovators. We analyze different innovative contributions of intermediate and end users that have been sold and evaluated within the healthcare sector. Several studies in the healthcare sector have shown that healthcare professionals are an important source of innovation. Yet, to date, companies and scholars have paid little attention to the end users of medical devices: patients. We focus on the innovative behavior of patients and their relatives, their motivations, and their contributions to improving the quality of their own and ultimately of other patients' therapy. We analyze innovations of producers, healthcare professionals, patients, and relatives in the German, UK, and U.S. markets for medical smartphone apps (Apple App Store) and conduct 16 semi-structured interviews. Our findings show that users develop around 46% of all medical smartphone applications (apps). We analyzed 510,229 user ratings and found that apps designed by patients, relatives, and healthcare professionals are rated significantly better by App Store customers than apps created by professional software companies. Apps developed by patients' relatives achieve significantly more downloads and generate on average three times higher revenues per year. The initial medical smartphone app developments in the early days of the Apple App Store were mainly triggered by healthcare professionals. The interview data shows the extensive medical knowledge of patients and their relatives, particularly those with chronic diseases. The overall findings are in line with a current literature stream that indicates that patients are gaining more influence on their treatment, are better informed, and are taking more actions to increase their quality of life. Commercial healthcare companies should take advantage of this and should consider including patients and relatives into their product development.
    Keywords: user innovation,patient,relative,healthcare professional,m-health,medical,smartphone applications,app,apps
    Date: 2016
  3. By: Tugay ARAT (Selcuk University, Faculty Of Tourism)
    Abstract: As a result of the developments in information and communication Technologies, and their widely and densely use new marketing mediums have recently emerged. A number of platforms have also appeared in product preference in terms of consumers. The masses communicate with each other on social media. Firms are looking for the ways of affecting the preferences of customers, and they use social media as a marketing environment. Today, the competition between firms has raised, therefore most firms find traditional marketing methods inadequate in reaching to their customers. Therefore, they aim to take action in every environment in which customers exist. This situation causes producing firms to; conduct marketing activities in a more number of ways in digital or virtual media. In recent years, in tourism industry hotel services also use social media for purposes such as effective advertisement, reaching more customers and building brand loyalty. Through social media, tourism services can reach to more customer faster. Besides, customers can also quickly reach to tourism services through their social media accounts in the stages of information searching, assessment of alternatives, selecting choices and purchasing. The aim of this study is to explain how hotel services manage their Facebook accounts and which features they use, and to bring forward proposals. For this reason, Facebook accounts of these hotel services has been studied through content analysis method.
    Keywords: Tourism, Communication Technologies, Social Media
    JEL: M30
  4. By: Oksana Zaporozhets (National Research University Higher School of Economics)
    Abstract: The paper introduces a metaphor "digital porosity" aiming to grasp the non-uniformity, limitations and gaps of digital connectivity (technological, material, spatial, social, etc.) in urban spaces. Being used as a research guidance, the metaphor raises the questions what digital porosity is? how is it produced? how is it changing? Based on the research of internet connectedness and practices of Internet use in the subways of Moscow and Saint-Petersburg, the paper states that the extension of the Internet zone and the inclusion of new urban spaces do not automatically increase the connectivity of the city, since the latter depends not only on the availability or the quality of internet communication, but also on the intentions and skills of the internet users and their ideas about the comfort and the possibility of internet connection, the role of the subway ride in the broader planning horizons.
    Keywords: City, porosity, digital porosity, subway, subway user, digitalization, digital connectivity, Wi-Fi, Saint-Petersburg, Moscow
    JEL: Z
    Date: 2016
  5. By: He, Xi (University of Connecticut); Lopez, Rigoberto A. (University of Connecticut); Liu, Yizao (University of Connecticut)
    Abstract: This paper uses data collected from hypothetical and non-hypothetical choice-based conjoint survey instruments to estimate willingness to pay for distance-based local food products. The survey was administered to three different groups of respondents: members of a consumer buying club with local and grass-fed market experience, a random sample of Maryland residents, and shoppers at a non-specialty suburban Maryland grocery store. We find that both the random sample of Maryland residents and the grocery store shoppers are willing to pay a premium for local products, but view local and grass-fed production as substitutes. Conversely, members of the consumer buying club are willing to pay significantly less for local than their counterparts, but do not conflate local with other premium attributes, such as grass-fed production.
    Keywords: Online advertising, media substitution, translog cost function, CSDs
    JEL: L13 M37 D12
    Date: 2015–07
  6. By: Mohammad A Al-hawari (University of Sharjah)
    Abstract: The major aim of this study is to investigate and compare the influence of service quality and openness to experience on customers switching costs. Self-administrated survey was used to collect data from bank customers in the UAE. Structural Equation Modeling (SEM) using AMOS.20 was used to test for the hypothesized relationship. The results showed that service quality has a positive and significant relationship with switching costs. However, the personality traits of openness to experience had a negative and significant relationship with switching costs. Bank managers should not keep a higher level of service quality regardless of the type of customers’ personality of openness to experience. Bank managers need to investigate the level of this personality in order for them to identify the relational oriented customers
    Keywords: Services Quality; Openness to experience; Switching Costs; Banks
    JEL: M39 M31 M31

This nep-pay issue is ©2016 by Bernardo Bátiz-Lazo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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