The Adoption Process of Payment Cards -An Agent- Based Approach
AbstractWe investigate the payment card's adoption rate under consumers' and merchants' awareness of network externalities, given two levels of Interchange Fees in a multiagent card market. For the purpose of our research, in multiple instances of the model (scenarios) the investigated effects are analyzed over the complete process of adoption, until the market's saturation point is achieved. For each scenario, a comparison is made between two different levels of Interchange Fees and different degrees of consumers' and merchants' awareness. We model explicitly the interactions between consumers and merchants at the point of sale. We 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.
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Bibliographic InfoPaper provided by Banco de México in its series Working Papers with number 2012-02.
Date of creation: May 2012
Date of revision:
Two-sided markets; financial services; network formation.;
Other versions of this item:
- Biliana Alexandrova-Kabadjova & Sara G. Castellanos Pascacio & Sara G. Castellanos Pascacio & Alma L. Garcia-Almanza, 2012. "The Adoption Process of Payment Cards. An Agent-Based Approach," Working Papers 1213, BBVA Bank, Economic Research Department.
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-29 (All new papers)
- NEP-COM-2012-05-29 (Industrial Competition)
- NEP-NET-2012-05-29 (Network Economics)
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