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Card Acceptance and Surcharging: the Role of Costs and Competition

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  • Jonker Nicole

    (De Nederlandsche Bank)

Abstract

The payment cards market is a two-sided market. Cost sensitivity of both consumers and merchants for card services influences total demand. Survey data of Dutch merchants shows that costs and cost perception affect acceptance as well as surcharging decisions. Merchants who find payment cards expensive are less likely to accept them and more likely to surcharge their customers for using them. Merchants who face any competition accept debit card payments relatively more often than merchants with monopoly power, and they are less likely to surcharge their customers for debit card usage. Intense competition leads to higher credit card acceptance.

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Bibliographic Info

Article provided by De Gruyter in its journal Review of Network Economics.

Volume (Year): 10 (2011)
Issue (Month): 2 (June)
Pages: 1-35

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Handle: RePEc:bpj:rneart:v:10:y:2011:i:2:n:4

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References

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Cited by:
  1. Sebastian Wismer, 2013. "Intermediated vs. Direct Sales and a No-Discrimination Rule," Working Papers 131, Bavarian Graduate Program in Economics (BGPE).
  2. Pyykko, Elina, 2011. "Review of the Payment Services Directive: The question of surcharges," ECRI Papers 6290, Centre for European Policy Studies.
  3. Nicole Jonker, 2013. "Social costs of POS payments in the Netherlands 2002-2012: Efficiency gains from increased debit card usage," DNB Occasional Studies 1102, Netherlands Central Bank, Research Department.

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