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Card Acceptance and Surcharging: the Role of Costs and Competition

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  • Jonker Nicole

    (De Nederlandsche Bank)

Abstract

The payment cards market is a two-sided market. Cost sensitivity of both consumers and merchants for card services influences total demand. Survey data of Dutch merchants shows that costs and cost perception affect acceptance as well as surcharging decisions. Merchants who find payment cards expensive are less likely to accept them and more likely to surcharge their customers for using them. Merchants who face any competition accept debit card payments relatively more often than merchants with monopoly power, and they are less likely to surcharge their customers for debit card usage. Intense competition leads to higher credit card acceptance.

Suggested Citation

  • Jonker Nicole, 2011. "Card Acceptance and Surcharging: the Role of Costs and Competition," Review of Network Economics, De Gruyter, vol. 10(2), pages 1-35, June.
    • Handle: RePEc:bpj:rneart:v:10:y:2011:i:2:n:4
    DOI: 10.2202/1446-9022.1249
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    References listed on IDEAS

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    Cited by:

    1. Krivosheya, Egor & Korolev, Andrew, 2018. "Benefits of the retail payments card market: Evidence from Russian merchants," Journal of Business Research, Elsevier, vol. 88(C), pages 466-473.
    2. Carlos A. Arango-Arango & Héctor M. Zárate-Solano & Nicolás F. Suárez-Ariza, 2017. "Determinantes del Acceso, Uso y Aceptación de Pagos Electrónicos en Colombia," Borradores de Economia 999, Banco de la Republica de Colombia.
    3. Nicole Jonker & Mirjam Plooij & Johan Verburg, 2017. "Did a Public Campaign Influence Debit Card Usage? Evidence from the Netherlands," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(1), pages 89-121, October.
    4. 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).
    5. David Bounie & Youssouf Camara, 2020. "Card-Sales Response to Merchant Contactless Payment Acceptance," Post-Print hal-02296302, HAL.
    6. Bounie, David & Camara, Youssouf, 2020. "Card-sales response to merchant contactless payment acceptance," Journal of Banking & Finance, Elsevier, vol. 119(C).
    7. Wismer, Sebastian, 2013. "Intermediated vs. Direct Sales and a No-Discrimination Rule," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79999, Verein für Socialpolitik / German Economic Association.
    8. Slemrod, Joel & Collins, Brett & Hoopes, Jeffrey L. & Reck, Daniel & Sebastiani, Michael, 2017. "Does credit-card information reporting improve small-business tax compliance?," Journal of Public Economics, Elsevier, vol. 149(C), pages 1-19.
    9. Terri Bradford & Fumiko Hayashi, 2014. "Mobile payments : merchants’ perspectives," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 33-58.
    10. David Bounie & Abel François & Leo Van Hove, 2017. "Consumer Payment Preferences, Network Externalities, and Merchant Card Acceptance: An Empirical Investigation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(3), pages 257-290, November.
    11. Camara,Youssouf, 2021. "Digital Payments and Business Resilience : Evidence in the Time of COVID-19," Policy Research Working Paper Series 9665, The World Bank.
    12. Ardizzi, Guerino, 2013. "Card versus cash: empirical evidence of the impact of payment card interchange fees on end users’ choice of payment methods," MPRA Paper 48088, University Library of Munich, Germany, revised 25 May 2013.
    13. Egor A. Krivosheya, 2018. "Evaluating Efficient Multilateral Interchange Fees: Evidence from End-User Benefits," HSE Working papers WP BRP 66/FE/2018, National Research University Higher School of Economics.
    14. Leo Van Hove & Farhod P. Karimov, 2016. "The role of risk in e-retailers’ adoption of payment methods: evidence for transition economies," Electronic Commerce Research, Springer, vol. 16(1), pages 27-72, March.
    15. Kim Huynh & Jozsef Molnar & Oleksandr Shcherbakov & Qinghui Yu, 2020. "Demand for Payment Services and Consumer Welfare: The Introduction of a Central Bank Digital Currency," Staff Working Papers 20-7, Bank of Canada.
    16. Pyykko, Elina, 2011. "Review of the Payment Services Directive: The question of surcharges," ECRI Papers 6290, Centre for European Policy Studies.
    17. Nicole Jonker, 2013. "Social costs of POS payments in the Netherlands 2002-2012: Efficiency gains from increased debit card usage," DNB Occasional Studies 1102, Netherlands Central Bank, Research Department.
    18. Marta Jakubowska, 2017. "The Role Of Cashless Transactions In The Process Of Limiting The Scale Of The Shadow Economy," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 6(4), pages 23-37.
    19. David Bounie & Youssouf Camara, 2019. "Card-Sales Response to Merchant Contactless Payment Acceptance: Causal Evidence," Working Papers hal-02296302, HAL.

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