{
  "title": "Bank Competition and Household Privacy in a Digital Payment Monopoly",
  "publication": "IMF Working Papers, June 9, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328",
  "overlayPath": "/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328/index.md",
  "summary": "Lenders can exploit households' payment data to infer their creditworthiness. When households value privacy, they then face a tradeoff between protecting such privacy and credit conditions.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Lenders can exploit households' payment data to infer their creditworthiness.\n- Households that value privacy face a tradeoff between protecting privacy and obtaining favorable credit conditions.\n- The study analyzes how introducing an informationally more intrusive digital payment vehicle affects households' cash use, credit access, and welfare.\n- A tech monopolist controls the intrusiveness of the new payment method and strategically manipulates information asymmetries among households and oligopolistic banks.\n- The tech monopolist extracts data contracts that are more lucrative than lending on its own.\n- The laissez-faire equilibrium results in a digital payment vehicle that is more intrusive than socially optimal, providing a rationale for regulation."
    },
    {
      "heading": "Model and Mechanism",
      "content": "- Actors:\n  - Households who value privacy and choose between cash and the digital payment vehicle.\n  - A tech monopolist who issues the digital payment vehicle and controls its informational intrusiveness.\n  - Oligopolistic banks who compete in lending and can use payment data to infer creditworthiness.\n- Key mechanism:\n  - The monopolist sets intrusiveness and extracts value by designing data contracts that exploit information asymmetries between households and banks.\n  - Payment data allow lenders to infer household creditworthiness, altering credit access and terms.\n- Outcome:\n  - Data contracts with banks can be more lucrative for the monopolist than direct lending.\n  - Market equilibrium under laissez-faire delivers excessive intrusiveness relative to the social optimum."
    },
    {
      "heading": "Findings and Key Statistics",
      "content": "- Pages: 55\n- Authors: Itai Agur, Anil Ari, Giovanni Dell'Ariccia\n- Publication date: June 9, 2023\n- Series: Working Paper No. 2023/121\n- Issue: 121\n- Volume: 2023\n- DOI: https://doi.org/10.5089/9798400244865.001\n- Stock No: WPIEA2023121\n- ISBN: 9798400244865\n- ISSN: 1018-5941\n- Subject areas: Consumer credit; Credit; Data collection; Digital financial services; Economic and financial statistics; Financial institutions; Loans; Money; Technology\n- Keywords: bank competition; Big Tech; Consumer credit; Credit; Data collection; data contract; Data regulation; DC issuer; Digital financial services; Financial intermediation; Loans; monopolist digital currency issuer; payment vehicle; Privacy; tech monopolist"
    },
    {
      "heading": "Policy Implications and Recommendations",
      "content": "- The laissez-faire outcome—where the digital payment vehicle is more intrusive than socially optimal—provides a rationale for regulatory intervention.\n- Potential policy focus areas implied by the findings:\n  - Regulating the informational intrusiveness of digital payment vehicles issued by tech monopolists.\n  - Addressing data-contract arrangements between payment-platform monopolists and banks to limit exploitative extraction of household data value.\n  - Balancing household privacy protections against the credit-enhancing benefits of payment-derived information.\n\nIMF Working Paper: \"Bank Competition and Household Privacy in a Digital Payment Monopoly\" (Working Paper No. 2023/121), June 9, 2023.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328/bundle-manifest.json)",
    "Authors: Itai Agur, Anil Ari, Giovanni Dell'Ariccia",
    "Published: June 9, 2023",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400244865.001",
    "Lenders can exploit households' payment data to infer their creditworthiness.",
    "Households that value privacy face a tradeoff between protecting privacy and obtaining favorable credit conditions.",
    "The study analyzes how introducing an informationally more intrusive digital payment vehicle affects households' cash use, credit access, and welfare.",
    "A tech monopolist controls the intrusiveness of the new payment method and strategically manipulates information asymmetries among households and oligopolistic banks.",
    "The tech monopolist extracts data contracts that are more lucrative than lending on its own.",
    "The laissez-faire equilibrium results in a digital payment vehicle that is more intrusive than socially optimal, providing a rationale for regulation.",
    "Actors:",
    "Key mechanism:",
    "Outcome:",
    "Pages: 55",
    "Authors: Itai Agur, Anil Ari, Giovanni Dell'Ariccia",
    "Publication date: June 9, 2023",
    "Series: Working Paper No. 2023/121",
    "Issue: 121",
    "Volume: 2023",
    "DOI: https://doi.org/10.5089/9798400244865.001",
    "Stock No: WPIEA2023121",
    "ISBN: 9798400244865",
    "ISSN: 1018-5941",
    "Subject areas: Consumer credit; Credit; Data collection; Digital financial services; Economic and financial statistics; Financial institutions; Loans; Money; Technology",
    "Keywords: bank competition; Big Tech; Consumer credit; Credit; Data collection; data contract; Data regulation; DC issuer; Digital financial services; Financial intermediation; Loans; monopolist digital currency issuer; payment vehicle; Privacy; tech monopolist",
    "The laissez-faire outcome—where the digital payment vehicle is more intrusive than socially optimal—provides a rationale for regulatory intervention.",
    "Potential policy focus areas implied by the findings:",
    "**Working Paper**"
  ],
  "related": [
    {
      "title": "Working Paper",
      "role": "paper",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2023/english/wpiea2023121-print-pdf.pdf",
      "summary": {
        "path": "/-/media/files/publications/wp/2023/english/wpiea2023121-print-pdf.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/wp/2023/english/wpiea2023121-print-pdf.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328/index.md",
    "json": "/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328/index.json",
    "bundleManifest": "/en/publications/wp/issues/2023/06/09/bank-competition-and-household-privacy-in-a-digital-payment-monopoly-534328/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-16T22:40:33.453Z"
}