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| dc.title | When Interoperability Increases Market Power: Evidence from Peru's Instant Payment Systems |
| dc.contributor.author | Burga, Carlos |
| dc.contributor.author | Cespedes, Jacelly |
| dc.contributor.author | Parra, Carlos R |
| dc.contributor.author | Cerón, Marcos |
| dc.contributor.author | Quispe, Isaí |
| dc.contributor.orgunit | Department of Research and Chief Economist |
| dc.coverage | Peru |
| dc.date.available | 2025-12-15T00:12:00 |
| dc.date.issue | 2025-12-15T00:12:00 |
| dc.description.abstract | Instant payment systems have rapidly gained global traction by enhancing transaction efficiency, yet evidence remains limited on how their designparticularly interoperabilityshapes market structure. We exploit Perus 2023 interoperability mandate as a quasi-natural experiment using a difference-in-differences design. Mandated interoperability increased deposit market concentration by approximately 2%. Incumbent banks linked to the dominant digital wallet expanded their deposit market share by nearly 10% and reduced deposit interest rates by 5080 basis points. We also observe more branch closures in high-adoption areas and declining microcredit. A model explains these results through an “amenity shock,” boosting digital wallet convenience for all adopters. Due to network externalities, the largest incumbent wallet captures a disproportionate share of new users in dual-platform markets an “amenity effect” that ultimately increases concentration. By contrast, in single-platform regions, interoperability lowers barriers for new providers an “entry effect” that spurs competition and erodes incumbent dominance. Our results show that this amenity effect in dual-platform cities outweighs the entry effect elsewhere. Overall, our findings show competitive effects of interoperability mandates critically depend on initial market structure and distribution of platform market shares. |
| dc.format.extent | 33 |
| dc.identifier.doi | http://dx.doi.org/10.18235/0013871 |
| dc.identifier.url | https://publications.iadb.org/publications/english/document/When-Interoperability-Increases-Market-Power---Evidence-from-Peru-s-Instant-Payment-Systems.pdf |
| dc.language.iso | en |
| dc.publisher | Inter-American Development Bank |
| dc.subject | Fintech |
| dc.subject | Interoperability |
| dc.subject | Digital Technology |
| dc.subject | Competitiveness |
| dc.subject | Digital Payment |
| dc.subject | Payment System |
| dc.subject | Rating |
| dc.subject | Financial Inclusion |
| dc.subject.jelcode | E42 - Monetary Systems • Standards • Regimes • Government and the Monetary System • Payment Systems |
| dc.subject.jelcode | J31 - Wage Level and Structure • Wage Differentials |
| dc.subject.jelcode | O33 - Technological Change: Choices and Consequences • Diffusion Processes |
| dc.type | Working Papers |
| idb.identifier.pubnumber | IDB-WP-01767 |
| idb.operation | RG-K1198 |