IDEAS home Printed from https://ideas.repec.org/a/aza/jpss00/y2018v12i2p150-165.html

Merchant acceptance of cash and credit cards at the point of sale

Author

Listed:
  • Fung, Ben
  • Huynh, Kim P.
  • Nield, Kerry
  • Welte, Angelika

Abstract

Recent data show that the use of credit cards in Canada has been increasing, while the use of cash has been declining. At the same time, only two-thirds of small or medium-sized enterprises accept credit cards. To better understand the future development of this trend, it is important to study whether a change in merchant fees will increase credit card acceptance and thus further reduce cash use. To this end, this paper calculates the level of merchant fee where a merchant would be indifferent to accepting a credit card or cash payment, using the merchant indifference test. The study finds that the results are sensitive to the underlying assumptions. The paper also discusses the key issues of applying such a methodology to Canada.

Suggested Citation

  • Fung, Ben & Huynh, Kim P. & Nield, Kerry & Welte, Angelika, 2018. "Merchant acceptance of cash and credit cards at the point of sale," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 12(2), pages 150-165, July.
    • Handle: RePEc:aza:jpss00:y:2018:v:12:i:2:p:150-165
    as

    Download full text from publisher

    File URL: https://hstalks.com/article/3285/download/
    Download Restriction: Requires a paid subscription for full access.
    File URL: https://hstalks.com/article/3285/
    Download Restriction: Requires a paid subscription for full access.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kim Huynh & Gradon Nicholls & Oleksandr Shcherbakov, 2022. "Equilibrium in Two-Sided Markets for Payments: Consumer Awareness and the Welfare Cost of the Interchange Fee," Staff Working Papers 22-15, Bank of Canada.
    2. Arango-Arango, Carlos A. & Betancourt-García, Yanneth Rocío & Restrepo-Bernal, Manuela, 2022. "An application of the tourist test to Colombian merchants," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(4).
    3. Aurazo Jose & Vasquez Jose, 2019. "Merchant Card Acceptance: An Extension of the Tourist Test for Developing Countries," Review of Network Economics, De Gruyter, vol. 18(2), pages 109-139, June.
    4. José Aurazo & Holti Banka & Guillermo Galicia & Nilima Ramteke & Vatsala Shreeti & Kiyotaka Tanaka, 2025. "Pricing in fast payments: a practical and theoretical overview," BIS Working Papers 1295, Bank for International Settlements.
    5. Angelika Welte & Jozsef Molnar, 2021. "The market for acquiring card payments from small and medium-sized Canadian merchants," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(2), pages 87-97, April.
    6. Geneviève Vallée, 2018. "How Long Does It Take You to Pay? A Duration Study of Canadian Retail Transaction Payment Times," Staff Working Papers 18-46, Bank of Canada.
    7. Christopher Henry & Matthew Shimoda & Doina Rusu, 2024. "2023 Methods-of-Payment Survey Report: The Resilience of Cash," Discussion Papers 2024-08, Bank of Canada.
    8. Kim Huynh & Gradon Nicholls & Oleksandr Shcherbakov, 2019. "Explaining the Interplay Between Merchant Acceptance and Consumer Adoption in Two-Sided Markets for Payment Methods," Staff Working Papers 19-32, Bank of Canada.

    More about this item

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aza:jpss00:y:2018:v:12:i:2:p:150-165. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Henry Stewart Talks (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.