Competing Payment Schemes
AbstractThis paper presents a model of competing payment schemes. Unlike previous work on generic twosided markets, the model allows for the fact that in a payment system users on one side of the market (merchants) compete to attract users on the other side (consumers who may use cards for purchases). It analyzes how competition between card associations and between merchants affects the choice of interchange fees, and thus the structure of fees charged to cardholders and merchants. Implications for other two-sided markets are discussed.
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Bibliographic InfoPaper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0311.
Date of creation: Sep 2003
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-LAB-2003-09-14 (Labour Economics)
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