scholarly journals Pricing Payment Cards

2013 ◽  
Vol 5 (3) ◽  
pp. 206-231 ◽  
Author(s):  
Özlem Bedre-Defolie ◽  
Emilio Calvano
Keyword(s):  
Payment Card ◽  
Price Structure ◽  
Interchange Fees ◽  
Extensive And Intensive Margins ◽  
Payment Cards ◽  
Profit Maximizing ◽  
Two Sided Markets

Payment card networks, such as Visa, require merchants' banks to pay substantial “interchange” fees to cardholders' banks on a per transaction basis. This paper shows that a network's profit-maximizing fee induces an inefficient price structure, oversubsidizing card usage and overtaxing merchants. We show that this distortion is systematic and arises from the fact that consumers make two distinct decisions (membership and usage), whereas merchants make only one (membership). In general, we contribute to the theory of two-sided markets by introducing a model that distinguishes between extensive and intensive margins, thereby explaining why two-part tariffs are useful pricing tools for platforms. (JEL D42, D85, G21, L12)

scholarly journals Market Definition and Market Power in Payment Card Networks: Some Comments and Considerations

2006 ◽  
Vol 5 (1) ◽  
Author(s):  
Lawrence J. White
Keyword(s):  
Market Power ◽  
Joint Ventures ◽  
Market Definition ◽  
Payment Card ◽  
Network Characteristics ◽  
Payment Cards ◽  
Two Sided Markets

Antitrust and regulatory concerns swirl around the payment cards industry, for understandable reasons: It is not atomistic; it has network characteristics; it involves two-sided markets; and its two prominent members – Visa and MasterCard – are network joint ventures of the banks that issue cards to consumers and enroll and service the merchants who accept those cards. These characteristics raise the possibility that the industry may not be fully competitive and thus raise potential policy concerns. But these same characteristics also cloud the standard against which the performance of the industry should be judged and complicate the analysis necessary for forming judgments.

scholarly journals The Economics of Two-Sided Markets

2009 ◽  
Vol 23 (3) ◽  
pp. 125-143 ◽  
Author(s):  
Marc Rysman
Keyword(s):  
Public Policy ◽  
Operating Systems ◽  
Video Game ◽  
Regulatory Policy ◽  
Consumer Electronics ◽  
The Other ◽  
Payment Card ◽  
Payment Cards ◽  
Game Developers ◽  
Two Sided Markets

Broadly speaking, a two-sided market is one in which 1) two sets of agents interact through an intermediary or platform, and 2) the decisions of each set of agents affects the outcomes of the other set of agents, typically through an externality. In the case of a video game system, the intermediary is the console producer—Sony in the scenario above—while the two sets of agents are consumers and video game developers. Neither consumers nor game developers will be interested in the PlayStation if the other party is not. Similarly, a successful payment card requires both consumer usage and merchant acceptance, where both consumers and merchants value each others' participation. Many more products fit into this paradigm, such as search engines, newspapers, and almost any advertiser-supported media (examples in which consumers typically negatively value, rather than positively value, the participation of the other side), as well as most software or title-based operating systems and consumer electronics. This paper seeks to explain what two-sided markets are and why they interest economists. I discuss the strategies that firms typically consider, and I highlight a number of puzzling outcomes from the perspective of the economics of two-sided markets. Finally, I consider the implications for public policy, particularly antitrust and regulatory policy, where there have been a number of recent issues involving media, computer operating systems, and payment cards.

scholarly journals The Role of Interchange Fees in Two-Sided Markets: An Empirical Investigation on Payment Cards

2016 ◽  
Vol 98 (2) ◽  
pp. 367-381 ◽  
Author(s):  
Santiago Carbó Valverde ◽  
Sujit Chakravorti ◽  
Francisco Rodríguez Fernández
Keyword(s):  
Empirical Investigation ◽  
Interchange Fees ◽  
Payment Cards ◽  
Two Sided Markets

Finding Profit-Maximizing Strategies for the Artificial Payment Card Market

2008 ◽  
Author(s):  
Biliana Alexandrova-Kabadjova ◽  
Edward P. K. Tsang ◽  
Andreas Krause
Keyword(s):  
Payment Card ◽  
Profit Maximizing

The Adoption Process of Payment Cards

2014 ◽  
pp. 1228-1252 ◽  
Author(s):  
Biliana Alexandrova-Kabadjova ◽  
Sara G. Castellanos-Pascacio ◽  
Alma L. Garcia-Almanza
Keyword(s):  
Adoption Process ◽  
Point Of Sale ◽  
Adoption Rate ◽  
Interchange Fees ◽  
Payment Cards ◽  
Multi Agent ◽  
Net Benefits ◽  
Different Levels ◽  
Complete Process ◽  
Model Scenarios

The authors investigate the payment adoption rate under consumers' and merchants' awareness of network externalities, given two levels of interchange fees in a multi-agent card market. For the purpose of their research, in multiple instantiations of the model (scenarios) the investigated effects are analyzed over the complete process of adoption, until the market's saturation point is achieved. Then, for each scenario, a comparison is made between two different levels of interchange fees and different degrees of consumers' and merchants' awareness. To this end, the authors model explicitly the interactions between consumers and merchants at the point of sale. They allow card issuers to charge consumers with fixed fees and provide net benefits from card usage, whereas acquirers can charge fixed and transactional fees to merchants.

17. Payment cards

2017 ◽  
Author(s):  
MA Clarke ◽  
RJA Hooley ◽  
RJC Munday ◽  
LS Sealy ◽  
AM Tettenborn ◽  
...  
Keyword(s):  
General Circulation ◽  
Consumer Credit ◽  
Personal Identification ◽  
Personal Identification Number ◽  
Payment Card ◽  
Contractual Relationships ◽  
Payment Cards ◽  
Lender Liability ◽  
The Uk ◽  
Debit Cards

This chapter focuses on the use of payment cards in commercial transactions. Contactless cards are becoming increasing popular and account for 49 per cent of all cards in issue. Contactless payment is made through the tap of a card on (or by waiving it over) a reader, without requiring a personal identification number or signature. With the increased availability of mobile payment technology, contactless payments are likely to shift from cards to smartphones. This chapter begins with a discussion of the main types of payment card in general circulation in the UK, including credit (and charge) cards, debit cards, and ATM cards. It then considers contractual networks and the regulation of contractual relationships, along with liability for unauthorised transactions under the Consumer Credit Act 1974 (CCA) and Payment Services Regulations 2009. It also describes connected lender liability under CCA.

scholarly journals Externalities in Payment Card Networks: Theory and Evidence

2010 ◽  
Vol 9 (2) ◽  
Author(s):  
Sujit Chakravorti
Keyword(s):  
Social Welfare ◽  
Public Authorities ◽  
Payment Card ◽  
Advanced Economies ◽  
Payment Cards ◽  
Regulatory Interventions ◽  
The Impact

Payment cards continue to replace cash and checks in advanced economies. Along with the growth of payment card transactions has come greater scrutiny by public authorities of certain payment network rules along with the level of certain fees. This article reviews the growing payment card literature and discusses the impact of several regulatory interventions on card adoption, usage, and social welfare.

scholarly journals A METHODOLOGICAL FRAMEWORK FOR MEASURING THE LEVEL OF CONVENIENCE OF TRANSPORT TICKETING SYSTEMS

Transport ◽  
2018 ◽  
Vol 33 (4) ◽  
pp. 1005-1016 ◽  
Author(s):  
Dušan Zalar ◽  
Rasa Ušpalytė-Vitkūnienė ◽  
Danijel Rebolj ◽  
Marjan Lep
Keyword(s):  
Public Transport ◽  
Performance Indicators ◽  
Methodological Framework ◽  
Environmental Aspects ◽  
Payment Card ◽  
Smart Systems ◽  
Research Perspectives ◽  
Travel Experience ◽  
Payment Cards ◽  
Survey Results

Public transport sustainability is becoming a major driver for public transport development. Public transport ridership represents one of the key performance indicators of sustainability in the sense of balancing the economic, social and environmental aspects of public transport. There are various methods for improving the attractiveness of public transport for passengers by reducing resistances, which discourage potential and existing passengers to use public transport. Transport ticketing is one of the methods. This article presents a methodological framework for evaluating transport ticketing technologies with the use of a transport ticketing convenience model developed by the authors as well as some survey results through the application of the developed framework on traditional smart ticketing and contactless payment card ticketing technologies. First, a methodological framework for modelling ticketing convenience based on end-to-end passenger experience is presented. Second, a ticketing convenience model for barrier-free and double-sided validation baseline ticketing systems is developed. Third, the ticketing system based on contactless bank payment cards is compared with traditional smart ticketing systems in terms of convenience. It is shown that a contactless payment cards ticketing system has greater convenience or a better, more seamless travel experience than traditional smart systems. Finally, some research perspectives on enhancing the ticketing convenience model by using mobile smartphones with NFC, BLE and GPS technology, as well as the inclusion of technologies related to ticketing such as passenger information systems into the model, are contemplated.

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