Research On Charging Mechanism Of Universal Cash Saving And Withdrawing In China

Universal cash saving and withdrawing is a micro-payment service introduced by the people’s bank of China. The original intention of the service is to rely on the small batch payment system of the modern payment system, to take full advantage of the counter resources of the financial institutions, to improve the service processing efficiency and reduce a long time queuing problem for public.The service supplies a good chance for revitalizing the counter resources for financial institutions and improving resource utilization and financial service capabilities. It can meet customer needs, reduce the customers’service processing costs, improve the public’confidence for the entire financial industry. Moreover, the modern payment system relied on the service is more efficient and safer than others. However, the service is greatly concerned by public and media; on the other hand the reality is that fewer customers have received the service.The financial institutions attribute the reason to the low customer participation rate. The problem is that customers generally feel the fees paid on service are much higher than saved. Most practitioners attribute the problem and the phenomenon to the monopoly of commercial banks. They recommend the introduction of mandatory price policy. However, regulators said that cross-bank fees should be fixed by the banks themselves in accordance with market principles. So the development of universal cash saving and withdrawing is very difficult now.Then, where is the root of the unfavorable conditions of universal cash saving and withdrawing? Can it be changed the situation through the system? This paper attempts to solve the problem by theoretical analysis and model studies. It is found that charging mechanism of ATM market is very similar to universal cash saving and withdrawing market. So the research of charging mechanism on ATM market can help the new service find the solution.The problem of cross-bank ATM fees has been the focus of study of ATM market. ATM networks have a complex pricing system, and the pricing method and pricing structure are different. Research on surcharge fee, foreign fee and exchange fee can provide help for the paper. Domestic and foreign scholars have mostly used circular location model on research of charging mechanism of ATM market. They made the appropriate assumptions on the size of banks (including the number of ATM and clients) and other conditions. Finally, they focused on the choice of ATM pricing for banks on competitive environment, and the impact on consumer surplus, bank profit and social welfare.It is an innovative way to research universal cash saving and withdrawing by using the research method and model of charging on ATM market. It is used circular location model. Make the following assumptions on the size of banks:(1) two symmetrical banks; (2) a large-size bank and two symmetrical small-size banks. Then based on the different assumptions, analyze the market equilibrium and behavioral choices for servicing to existing customers and attracting potential customers.The existing charging mechanism is based on the agent bank. The paper studies the behavior of customers and banks on the market by cost-benefit principle.The final conclusion is that the existing customers replace the potential customers for the banks. For fierce market competition, banks may have no incentive to promote the service and customers wouldn’t like to participate in it for the high fees. The analysis conclusion is consistent with the status quo of universal cash saving and withdrawing. The existing charging mechanism arises many problems for impeding the development of the service, but it is the rational result of pursuing the maximize profit for banks and customers. However, this result does not comply with the original policy objective of the regulatory authorities, so the existing charging mechanism should be improved.Under the same model assumptions, use foreign fee and interchange fee to design a new cross-bank charging mechanism.The final conclusion is that the new mechanism makes the service develop and attract more potential customers. Banks, especially those with more networks, have incentive to promote universal cash saving and withdrawing in order to profit by virtue of their own network advantage. Based on these conclusions, three proposals referred are summarized as followed.First, on the condition of market economy, the government should develop the reasonable system, ensure effective operation, protect the pricing right for banks, and promote universal cash saving and withdrawing running smoothly.Second, according to market economic principles, how to effectively solve the distribution of benefits between large banks and small banks should be an important consideration under the new charging mechanism.Thirdly, the new charging mechanism, based on foreign fee and interchange fee, ensure a reasonable operation for universal cash saving and withdrawing market. This conclusion should be paid more attention to the relevant authorities.