A new paradigm in payments: The strengths of networks

Abstract

With the migration to the Single Euro Payments Area (SEPA), there is also a shift of paradigm in the business model. From the perspective of Stabell’s and Fjeldstad’s concept of ‘Chains, Shops, and Networks’, the payments business is described in this paper as a Network with different rules of value creation compared with value chains. This concept enables a comparison of the retail payments business with internet-based platforms, which are sometimes seen as future challengers for banks or payments providers, on the one hand, and with two-sided market models, on the other hand. As the generic mechanisms of Networks and Platforms are different, payments Networks should be able to preserve their unique position, benefit from the increase in retail payments transaction independent of the means of payments and leverage the use of open standards for their benefit.