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Unusual price-volume relationships in transaction pricing for payment cards

Author

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  • Dunn, Eric

Abstract

This paper documents a number of instances where the volume of credit and debit transactions shows unusual elasticity with respect to price — either falling as prices fall, or increasing as prices increase. It explores these cases by analysing payment transaction volumes in three countries with broadly similar economies: the USA, the UK and Australia. A conclusion is reached that the anomalies are genuine, and a hypothesis is presented to account for the anomalous relationship between price and volume. Payment instruments studied include credit cards and debit cards, drawing from primary materials published by the US Federal Reserve, the Nilson Report, the Reserve Bank of Australia, the Bank of England and APACS.

Suggested Citation

  • Dunn, Eric, 2007. "Unusual price-volume relationships in transaction pricing for payment cards," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 1(3), pages 273-281, April.
    • Handle: RePEc:aza:jpss00:y:2007:v:1:i:3:p:273-281
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    More about this item

    Keywords

    payments; transaction pricing; debit; credit; US; UK; Australia;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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