DNB Working Paper
No. 155 / November 2007
Christine Beijnen and Wilko Bolt
DNB W o r k i n g P a p e r
Size matters: economies of scale in
European payments processing
Size matters: economies of scale in European payments
processing
Christine Beijnen and Wilko Bolt*
* Views expressed are those of the author and do not necessarily reflect official positions
of De Nederlandsche Bank.
Working Paper No. 155/2007
November 2007
De Nederlandsche Bank NV
P.O. Box 98
1000 AB AMSTERDAM
The Netherlands
! !
"##$%$$& ' ()
* * ()* +"* (&+
(
, -
* - . /0* 1 / #2* "$$$
/ * .
3 45"%$&%+5&%+* 63 45"%$&%+%&$7
(
/8* 0 /
0 9: 0 (
/0
6 , /0 . ;0 : 0
- . /0* (
/0
! " # #
$
%
#
%
&# #
# $ '
#
Æ
# (
# ( # ) (
*
& #
+ ,
# - ,-# . # + %
,
# %
) %
/
#
# & ( & # ( # #
# / # ( 0 #
1 -* <+ %$$7* "$* / )80= >= ? :
>@ ? : :!
@
#
)
(
23 4 # & # # %
&
% # '
/
) 1556 # # # !7 7" !7 7" ) 3
/
# 3 % &
# 3
#
/ # 3
8 # 9 : 3
#
6 ; 3
' # 0 < ( & !15=:" 3
& # ! 0#" & # > 0 !155?"
& 0# 155155: / /
& 0# 3
9
/ ( & 0# # % @7 #
%
' & & ;3 !1555" 0# 0 > !"
3 #
0 <4 #
$ & >
0# # /
/
# A !9" & 1 &
# >
& !6" 3 $ * A !9" 0 < > #
$ ( >
& !."
11 1= 3
# /
# )
& /
BC !?" 1: D
/
1559 ( # ( #
?5 # (
69 / # # E
:
;
!?" !*" /3 %
# & ) /
& $
*
/ 0
# !
"
( # 3 (
3 3 >4
7> >7 >(4 7< >7 1556 !
" # 4 (
# #
% # # 0
# ( # #
?.
1 3 # /
) %$$A : :0 : B >
*
%$$7 ! )* : 6
#
D
# # ) # # %
# 0 # # -# - %
:? # $ , 3 #
/3 # ( # # /
,
# %
1556 # # ! " # ! " #
! " # # # #
#F
G H
H 1
H 1
H
Æ H
H H !1"
; # * ?
# # # # 1 ; # !"$ 8
& # # # # & * # # (
#
# # F
G G !"
# G #
3
# $ 1 G 1 3
1
D
# # G G Æ G G ,
!1" B
3 #
%
G G Æ G # 3
!" ; 2 <
( # %
; # /
$ 3 #
/
%
; %
1
* : * C
C
.
!" !" # 3 D
# # /
# # # ( /
<, 65 =. !/
" /
7 7 %
$ # %
(
# /
1" 1" 3
/
0 1 Æ
%
B !
" /
, 1 ( / 1 # #
* <(E ) #
!
, " /
# !
"
#
- -$ %
#
3 # # # $ /
+ 1" # #
9 ,
/ #
$ /
&# %
8 # %
3
#
3
* / 0 %$$% 6 , =
Log(Average Cost)
Log(Average Cost)
6 " 3 −1
−2
−1
−2
−3
−3
−4
−4
−5
−5
−6
−6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
2.0
9.5
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
Log(Volume)
8.0
8.5
9.0
9.5
Log(Volume)
* D : * & (
/
#
,
!1" F
G H H
1
!" H
Æ H
H
H H !9"
# G G G 9 3 # # /
>
/
3
# B " /
3
! " 1" #
1 # /
<,
=. 51 B " / > # Æ
: * :
: E0
,
* C * C
" * C * C C 5
% " "F !:?5 :19" G 11 .=1 G 6
( " # /
D
" # /
(B # !
6I
" (
# /
# / > 0 !155?"
0# !?" B !" # 6 ( /
%
! 3 %
"
1 ! %
" ( " " #
# # %
6
3 # & # # 1 (0 !1" E)'A !11" (+
!1=" (
D
!1=" (> !1" /
/
3 ? ! >" 9? !2( D
23" :5 !*+"
' %
8 #
( / # # " ( # # !1551555" !6" ; ## # # 0 ! 1 " " 6 # ' / & ! > " " # # # ; ## / ) 6 6
# # # *
(
+
. * :
C $* :* C"* : 1
6 % 0.11
DPRIVATE=0
Average Cost (in euro)
Average Cost (in euro)
0.45
0.40
0.35
0.30
0.25
DPRIVATE=1
0.10
1990−1999
0.09
0.08
0.07
0.20
0.06
2000−2005
0.15
0.05
2000−2005
0.10
0.04
1990−1999
0.05
0.03
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
11000
12000
Payment Volume (in mln)
1500
2000
2500
3000
3500
4000
4500
5000
Payment Volume (in mln)
1 : "##$"###* %$$$%$$& :0 C $* : C " !
:
( / &-
,-# 9 ? + G : #
9= ! 3
" ' ! 6"
1= :1 ) !" 0 : # 6 & # , # '
/
# # # %
%
77 &# F C * !
C C " 4 % * C
" 4 % C $7% * 52 9 %5* %$$A* > :!
* : %$"$* ? %& * +$$ "$ :@
11
D
, # %
# ) # 3
%
&#
,
Æ
# (
# 1 ! " ! B
#
# " 3
) & #
) # # 3
# # 3
) # %
: # /
B 9" /
#
# # /
9"
" # /
) 3 ( 9" B 9" / #
# # 9" " / 3
!:1: 9=5" G 6 111 G 6
" 9" B 9" !
/
" ? # #
" 3
!11" ) !16" >
/
%
1 ! %
" # # # * <(
E /
%
" / # 6 # " / 0 9 #
! "
: :
$$$$" "5+ :
1
6 5 : Average Cost measure
Average cost measure
1.75
1.50
1.25
1.00
1.2
1.0
0.8
0.6
0.75
0.50
0.4
0.25
0.2
0
500
1000
1500
2000
2500
3000
3500
4000
4500
0
5000
1000
2000
3000
4000
5000
6000
7000
8000
Volume POS Payments
Volume Bill Payments
: D : :0G D : E !
: :
# 9" D
&# 8
# #
' /
/
# 0
%
# # > %
# ) # #
3
6 9 B /
, # (
(
%
96: 3
#
:
:
:
/* * "#2%
19
# /
3 % + # # # (
/
3 % $
0 # /
3
# (
# # %
%
H"I * ,* / ,0 %$$%* 6
, 0 $%"5* , -
*
6 , /0 (* .:
H%I /* - 6 "##7* * (
Æ* ( 6 , !
"* %2+* "$$+"$5#
H5I /* 9* * 9( ,- "#22* (
: J0
* )
/ 9 :*
1* B
H+I /
* - ) %$$&* : * .
J* * .
0 '
(
(
/0 0 * . &$&
H&I /
- ) %$$A* .
0 * *
( ,
* H7I (
/0 %$$7* 1:8
- +
,
HAI K* %$$5* Æ* * , (
/0 /0 6 - * "L%$$5*
)0
H2I * )* J0M0* J 00* 9 %$$7* -
-
*
" #
* 5$* "A25"2$7
H#I N (* ( %$$7* J )
3 ( B,6
%$$7L5
1:
NL/(
/
((
-
E
: " -
* * (
N
* %$$&
6
""#2% "##"%$$&
BK
&"5+ %$$+%$$&
.
5%A% "##$%$$&
F
5%$$ %$$5%$$&
"A2& %$$%%$$&
/
#&% "##$"##+
F
%# "##&%$$&
E:
"+ "##&%$$&
-
1
(
N
(
E: (
(
(
N:
1( * N1E * (C1(LN1E L
F * . , 1
-,N J
1: 1
"&
$* .(/
% "* :0
"7 "* :0
5 "* :0
+ "* :0
&
$* .(/
""
$* .(/
""
$* .(/
%7572
7A
+
J
72$2
%"A7"A
$"5
$$2
"+#&
J J
%57+ "A7
""57"$ 7$"
$"$ $$$%
$$A $$+
"+"# A+#
J
52+2#
""#2%$$
$+7
$%"
%+%+
C$ : .(/* C" C"* *"7 C"##$* *%$$&
16
: % * ,
(Æ
J " J ": J "
$$"
$&"OOO
$5#OO
$5"OOO
%"$OOO
$5%OOO
$5"OOO
%$#OOO
$$"
$&"$$+ $5" $$% $5" $$%
8 E E0
$&#
#27A
"72%
7A
$2A
&22&
55"
7A
$2A
&2A$
5+&
7A
3 -
: 0
. O*OO*OOO ! "$*&*" 1?
,
: 5 3 (Æ
J %
J %:
5$AOOO
$%2OOO
%$$OOO
$$%
%$$
""#OO
$$7
$AA
$%&
"AA
$%&
$"+OOO
$"+OOO
$%&
"2+OOO
$$&OO
$%2 $$5
$%5 $$5
$#"OOO
" Æ
Æ
8 E E0
$$#OOO
$#"
+7#5
$7+
7A
$#&
+"5&
$2A
7A
3 -
: 1( * * %: 0
. O*OO*OOO ! "$*&*" 1.
: + 3 : ,
(Æ
J 5
5:
"
"
%
" " %
% %5"OOO
$$5
$$2 $$%
$"" $$5
$"# $$%
$"" $$2
$"& $$A
$%7 $$5
$22
&A%"
$$+
7A
$#%
52#%
"%+
7A
$""OOO
" "+7
$$2
$$5O
$++O
$$"
$5+
$55O
"5+
$55O
$$$
$$$
$$$
$$&
$$&
$55O
"#+OOO
$$7O
%
" "2&O
$$2OOO
$&2OOO
$+%OOO
Æ
Æ
Æ
% Æ
8 E E0
3 -
: 1( * * 5: . O*OO*OOO ! "$*&*" 1=
(
: & J % J %: J 5 J 5:
6
BK
.
F
/
F
E:
$%2
$%2
$%2
$%2
$%2
$%2
$%2
$%2
$""
$""
$"2
$"2
$%"
$$7
$+#
$57
$"#
$"#
$"#
$"#
$"#
$"#
$"#
$"#
$%5
$&%
$%7
$%7
$%+
$"#
$5+
$%"
$%2
$%5
$"#
$%7
15
Previous DNB Working Papers in 2007
No. 124
No. 125
No. 126
No. 127
No. 128
No. 129
No. 130
No. 131
No. 132
No. 133
No. 134
No. 135
No. 136
No. 137
No. 138
No. 139
No. 140
No. 141
No. 142
No. 143
No. 144
No. 145
No. 146
No. 147
No. 148
No. 149
No. 150
No. 151
No. 152
No. 153
No. 154
Andrew Hughes, Rasmus Kattai and John Lewis, Early Warning or Just Wise After the Event? The
Problem of Using Cyclically Adjusted Budget Deficits for Fiscal Surveillance
Kerstin Bernoth, Juergen von Hagen and Casper de Vries, The Forward Premium Puzzle: new
Evidence from Futures Contracts
Alexandra Lai, Nikil Chande and Sean O’Connor, Credit in a Tiered Payments System
Jean-Charles Rochet and Jean Tirole, Must-Take Cards and the Tourist Test
James McAndrews and Zhu Wang, Microfoundations of Two-sided Markets: The Payment Card
Example
John P. Jackson and Mark J. Manning, Central Bank intraday collateral policy and implications for
tiering in RTGS payment system
John Lewis, Hitting and Hoping? Meeting the Exchange Rate and Inflation Criteria During a Period
of Nominal Convergence
Paul T. de Beer and Robert H.J. Mosch, The waning and restoration of social norms: a formal
model of the dynamics of norm compliance and norm violation
Carin van der Cruijsen and Sylvester Eijffinger, The economic impact of central bank
transparency: a survey
Elisabeth Ledrut, Simulating retaliation in payment systems: Can banks control their exposure to a
failing participant?
Peter Wierts, The sustainability of euro area debt: a re-assessment
W.J. Willemse and R. Kaas, Rational reconstruction of frailty-based mortality models by a
generalisation of Gompertz’ law of mortality
Nicole Jonker and Thijs Kettenis, Explaining cash usage in the Netherlands: the effect of electronic
payment instruments
Paul Cavelaars and Jeroen Hessel, Regional Labour Mobility in the European Union: Adjustment
Mechanism or Disturbance?
Yakov Ben-Haim, Info-Gap Robust-Satisficing and the Probability of Survival
Andreas Pick, Financial contagion and tests using instrumental variables
Cheng Hsiao, Hashem Pesaran and Andreas Pick, Diagnostic Tests of Cross Section Independence
for Nonlinear Panel Data Models
Donato Masciandaro, Maria Nieto and Henriëtte Prast, Who pays for banking supervision?
Principles and practices
Marco Lombardi and Silvia Sgherri, (Un)naturally Low? Sequential Monte Carlo Tracking of the
US Natural Interest Rate
Michiel van Leuvensteijn, Jacob Bikker, Adrian van Rixtel and Christoffer Kok-Sørensen, A new
approach to measuring competition in the loan markets of the euro area
Allard Bruinshoofd and Leo de Haan, Market timing and corporate capital structure: A
transatlantic comparison
Leo de Haan and Jan Kakes, Are non-risk based capital requirements for insurance companies
binding?
Maarten van Rooij, Annamaria Lusardi and Rob Alessie, Financial literacy and stock market
participation
Jan Marc Berk and Job Swank, Regional Real Exchange Rates and Phillips Curves in Monetary
Unions: Evidence from the US and EMU
David-Jan Jansen and Jakob de Haan, The Importance of Being Vigilant: Has ECB
Communication Influenced Euro Area Inflation Expectations?
Maria Demertzis and Nicola Viegi, Inflation Targeting: a Framework for Communication
Jan Jacobs, Pieter Otter and Ard den Reijer, Information, data dimension and factor structure
John Lewis and Karsten Staehr, The Maastricht Inflation Criterion: What is the Effect of
Expansion of the European Union?
Tamim Bayoumi and Silvia Sgherri, On the Impact of Income and Policy Shocks on Consumption
Ard den Reijer, Identifying regional and sectoral dynamics of the Dutch staffing labour cycle
Jacob Bikker, Dirk Broeders and Jan de Dreu, Stock market performance and pension fund
investment policy: rebalancing, free float, or market timing?
DNB Working Paper
No. 35/April 2005
DNB W O R K I N G P A P E R
Jan Kakes and Cees Ullersma
Financial acceleration of booms
and busts
De Nederlandsche Bank