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An Introduction to the Economics of Payment Card Networks

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  • Hunt Robert M.

    (Research Department, Federal Reserve Bank of Philadelphia)

Abstract

Open payment card networks typically coordinate the activities of thousands of financial institutions that issue cards, millions of retail locations that accept them, and several hundred million consumers that use them. This coordination can include the collective setting of certain prices and other controversial network rules. Such practices have recently come under the scrutiny of antitrust authorities in the U.S. and abroad. This article provides a brief overview of the economics of the payment card industry, explaining some of the differences from the textbook model of competitive markets. Such differences are important factors for the antitrust analysis of payment card networks.

Suggested Citation

  • Hunt Robert M., 2003. "An Introduction to the Economics of Payment Card Networks," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-17, June.
    • Handle: RePEc:bpj:rneart:v:2:y:2003:i:2:n:3
    DOI: 10.2202/1446-9022.1020
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