The Feasibility of Competing E-purse Systems: A Case Study from the Netherlands

Electronic purse systems can be an alternative for cash payments as well as PIN payments or credit card payments. For retailers as well as banks this is attractive for reasons of cost and speed. At first sight, having one electronic purse system per country seems to be better for companies as well as consumers than having two or more systems. In the Netherlands, however, there were two competing systems during several years. The common banks started with one system, but one of these banks allied with the major telecom operator and introduced a compating system. This resulted in a costly battle. After five years the banks decided to return to one system. The rationality of the decisions in this case is analyzed from the perspective of standardization theory and game theory. the chapter ends with conclusions about the feasibility of competing banking chipcard systems.