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An Economic Analysis of the Determination of Interchange Fees in Payment Card Systems

Author

Listed:
  • Rochet Jean-Charles

    (IDEI, Toulouse University, and LSE.)

  • Tirole Jean

    (IDEI, Toulouse University, and MIT)

Abstract

The paper investigates, in a non-technical fashion, the economic determinants of interchange fees in payment card systems and the potential need for their regulation. Among other things, it demonstrates that the proposal for a cost-based regulation of interchange fees relies on an erroneous, vertically organized, model of the payment card industry.

Suggested Citation

  • Rochet Jean-Charles & Tirole Jean, 2003. "An Economic Analysis of the Determination of Interchange Fees in Payment Card Systems," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-11, June.
    • Handle: RePEc:bpj:rneart:v:2:y:2003:i:2:n:2
    DOI: 10.2202/1446-9022.1019
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