Mobile payments have changed the monetary and financial system, bringing higher efficiency, lower transaction costs, more accurate policy execution, more effective risk control and ultimately altered people’s daily lives.

Given the ongoing rapid development in mobile Internet and communications technology, academics have been delving into research on mobile payment systems and their implications for society.

New technology

Changes in payment systems indicate a transformation in consumption patterns that come with the evolution of society, said Yang Tao, dean assistant of the Institute of Finance at the Chinese Academy of Social Sciences (CASS). From barter and cash to non-cash payment systems; from traditional bank-cards and credit cards to Internet-based payment methods and the use of smart codes; new technologies have changed the monetary and financial system, bringing higher transaction efficiency, lower transaction costs, more accurate policy execution, more effective risk control and ultimately changed people’s daily lives, Yang said.

Dong Yun, deputy Secretary General of the Payment and Settlement Center at CASS, said mobile payment methods help improve customer stickiness, reducing the cost of financial circulation and boosting industries. For the payment industry, mobile payment systems provide diverse trading scenarios, impressively decreasing the operating costs and effectively expanding the transactional scope of the payment industry.

Yang pointed out that in developed or developing countries, mobile payment can replace cash as payment tools and be tailored to the financial needs of disadvantaged groups. They have created favorable facilities to serve left behind rural financial services. Rural areas should be an important experimental zone for mobile payment practices, Yang said.

Functional laws

Research on payment and settlement systems lack theoretical guidance and logistical support. Dong said that since the 21 century, with the breakouts of the subprime crisis and European debt crisis, controlling and lowering payment and settlement hazards became essential. High-efficiency payment and settlement systems have become increasingly fundamental in the financial system. Bankers have reached a consensus on the need to invest more in research on payment and settlement systems, as well as probing into related laws.

Yang said research in this field has been transformed into an academic “enriched ore” with rich theories and innovative research methods from the previous small “isolated carriage” in the train of monetary and credit literature. Construction of infrastructure in the financial market is the most important research field worthy of investigation in the current payment and settlement system. Yang suggested scholars in the field should pay more attention to the following issues: finding ways to deal with the relationship between payment and settlement systems and other infrastructure in the financial market, and the central bank and other financial supervisors; coordinating cross-border financial market infrastructure; and researching challenges based on public networks and distributed financial market infrastructure.

At present, research on payment economics has covered multiple links of payment and settlement, such as the rules for capital transfer, payment tools, organization, technical devices, and supervision systems. But it still needs more detailed collection, arrangement and research, Dong said. He added that monetary economics and industrial organizational theories are the two ways in which payment economics can be connected to the mainstream studies. Monetary economics has a macro-economic research perspective, inspecting the effect of new payment tools from the perspective of the evolution of the monetary system. Studies on payment tools from the perspective of industrial and organizational theory emphasize the cross-network externality in the two-sided market, asymmetrical prices, complementary or interdependent demands for bank card pricing strategy, and analysis of market structure, which has made up for the deficiency of monetary economics theories.

Chen Jianbin, a professor from the Business College of Beijing Union University, said cultural and social elements have to be taken into full consideration when investigating behavioral patterns of mobile payments.

Payment economics

Dong argued it is essential to use the empirical analysis method, data analysis and case studies to examine the effects of mobile payment on economic development, market function and financial stability.

Yang suggested that though the rapid development of global payment and settlement systems has brought about many inspiring research hotspots, related research is weak at home and abroad. This entails research on basic issues of the discipline. Dong suggested that development of the payment and settlement system can be regarded as a key case to research Chinese industrial development, enterprise innovation and institutional transition, and explain Chinese phenomena from a macro -economic perspective.