Stefan Henningsson, Jonas Hedman and Bo Andersson
Despite the negative conclusions made by Rhodon et al.( 2012) and Hanseth et al.( 2012) about the risk of constraining DI innovation by introducing control points, the issue remains that some actors may have a particular interest in shaping the evolution of the infrastructure. In the reported cases, the reasons for enforcing control points where primarily political, and‘ non‐rational’. The case about the Danish digital payment infrastructure below complements this view with a case where control could be rationally justified. However, as the use of control points comes with the risk of constraining the innovative capacity of the DI, the use of control points becomes in the Danish digital payment infrastructure a paradoxical balancing act between control and innovation.
3. Method
To explore the role of architectural control points in payment infrastructure evolution, we apply an explorative case study approach. The aim is to present a case that illuminates and explicates the role of architectural control points with focus on legal and technical issues in the payment infrastructure evolutions. To this end we present a story that takes historical events into account as well multilevel interdependencies( international, regional, and national).
We use secondary sources, such books, articles, annual reports, and official websites, as data inputs in the development of the case story. For the analysis we return to the theoretical concepts to identify architectural control and identify how legal and technical control points influence the evolution of payment infrastructure.
4. Evolving payment infrastructure
Payments are central to society and everyday life. It is the process of transferring assets, such as money, from one party to another party in the exchange of goods and services( Kokkola, 2010). Over time, this process has evolved, for example from barter to coin, from coins to bills of exchange and legal tender( bank notes and cheques), from gratitude based( the gold foot) to trust based( central banks), and from exchange based to provision based payments( Evans and Schmalensee, 2005). Many of these inventions left footprints in the form of architectural control points that influence the current and future payment infrastructure( Woodard 2008).
The payment infrastructure is not one invention; rather it is based on an incremental evolutionary process, taking place around the globe. In this section we present the case of payment infrastructure evolution. The story starts in the barter economy followed by the introduction of coins and banknotes to today’ s emerging global payment infrastructure with its national and organizational implications. We present and discuss two types of architectural control points that are influencing the evolution: legal and technical points.
4.1 From bartering to money
People have been exchanging goods and service, for example livestock for sacks of grain, labor for food and housing, pearls for land, and slaves for precious metals, for thousands of years( Ferguson, 2009). Early markets were based on barter between two parties, where goods or services were directly exchanged for other goods or services without using a medium of exchange. Barter markets never has been a primarily way of exchange. Instead, none‐cash societies have relied on gift‐economies, such as parts of the Pacific Islands. But bartering still exists, but to limited extend, mainly between friends or in situation of crises, such as hyperinflation or deflation( Graeber, 2001). Recently, with advancements in information technology, we see new emerging barter markets( Giesler, 2006). For instance, the whole file sharing movement with Bit Torrents and a number barter exchanges in the North‐America organized by National Association of Trade Exchanges( NATE). Bartering has some inherent limitations, including the presence of matching needs, the absence of common measure of value, and difficulty in storing wealth( Graeber, 2001). Historically, these limitations have been used as arguments for inventing money. However, Graeber( 2001) disagree and proposes that money was invented when humans moved from the obligation " I owe you one " to " I owe you one unit of something ". So according to Graeber, money emerged as credit and then later got the functions of a medium of exchange.
Initially, money was based on pearls, shells and pieces of precious metals( Ferguson, 2009). This type of money is labeled as commodity money and the most famous form is gold. The system of commodity money evolved into a system of representative money. In the process towards representative money, bills of exchange emerged( Ferguson, 2009). In the beginning, issued by gold and silver merchants or banks to their depositors. With time, these bills of exchange became accepted as a means of payment and were used as money. They emerged in Italy toward the end of the middle ages and the main purpose was to reduce the risk of robbery
242