A stakeholder perspective on successful electronic payment systems diffusion

Many proposals for electronic payment systems (EPS) have been made but the great majority have failed to achieve widespread adoption. The reasons why some proposals succeed and others fail remains unclear. The successful operation of these systems depends on the cooperation of a number of stakeholders including consumers, merchants, financial institutions and infrastructure providers. In this paper we analyse the conditions for success in terms of the benefits and costs of the system to these stakeholders. On the basis of theoretical arguments, we present two hypotheses about the necessary (but not sufficient) conditions for successful diffusion of an EPS: the distribution of costs benefits and risks among stakeholders must be mutual; and a critical mass of customers and merchants must be provided for the EPS by the financial or technology infrastructure partners. We illustrate the arguments with three case studies of recent attempts to create new electronic payments systems.