Collaboration and Competition in the Payment Eco-system

Digital artifacts take increasingly prominent positions in the life of individuals, organizations and the society at large. This paper inquires into the effects of digitalization on the financial industry. In the case of payments, the ecosystem surrounding a payment historically involved two parties exchanging goods and services for money (banknotes and coins). Today, payment increasingly onsists of digital representations of money in a globally intertwined system that involve many parties, such as payers, payment services providers, banks, telecom operators, mobile phone manufactures, and payees. We study how technological innovations influence the payment ecosystem, and find that digitalization has caused ecosystem turbulence by influencing competitive and collaborative dimensions of the ecosystem. The digitalization creates a new arena for competition that will require new collaboration forms among involved stockholders. In the extension, we find that future developments of the digital payment infrastructure are something very different from a traditional IT systems development project, which makes existing methods and approaches to systems development inadequate in addressing the challenge.