ABSTRACT
As a result of this new technology, payment services have shifted dramatically from paper-based giro and cheque payments to electronic giro and debit card payments. While only 10 per cent of non-cash payments in Norway were in electronic form in 1987, by 1999 this had risen to 60 per cent. This change was – at least partly – spurred by banks’ pricing policy; see Humphrey et al. (2001). Banks’ motivation to offer electronic payment systems may be due to both cost saving and competition: once the necessary investment is made, for the same type of transaction, electronic payments cost banks much less to produce than paper-based payments; see Flatraaker and Robinson (1995) and Wells (1996). If customers find
electronic payment systems more convenient than paper-based systems, and hence prefer the first, electronic payment systems may be viewed as a strategic variable in the competition for customers.
