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A study of the interrelated bilateral transactions in credit card networks Author info | Abstract | Publisher info | Download info | Related research | Statistics Sujit Chakravorti
Alpa Shah
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Over the last decade, consumers have tripled their use of credit cards as more merchants have increased their acceptance of them. This increase suggests that incentives in today's marketplace favor greater credit card use by consumers and acceptance by merchants. In this paper, we study the set of interrelated bilateral transactions in credit card networks. First, we survey the recent theoretical papers using this approach and find there is a lack of consensus regarding the optimal set of pricing policies. Second, we explore each of these interrelated transactions emphasizing common market practices and the underlying regulatory and legal framework. Third, we analyze the impact of certain credit card market practices on competing payment instruments such as debit cards.
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Paper provided by Federal Reserve Bank of Chicago in its series Occasional Paper; Emerging Payments with number
EPS-2001-2.
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Date of creation: 2001Date of revision:
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Keywords: Credit cards ; Debit cards ; Payment systems ; Other versions of this item:
This paper has been announced in the following NEP Reports :
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