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Merchant Acceptance, Costs, and Perceptions of Retail Payments: A Canadian Survey

Author

Listed:
  • Carlos Arango
  • Varya Taylor

Abstract

Using the results of a survey on accepted means of payment, the authors examine merchant preferences and perceptions of retail payment reliability, risk, and costs; the share of each type of payment method over total sales; and the costs involved in accepting payments. Models are developed for each means of payment in order to determine how merchant characteristics may influence their responses. The authors find that the average transaction value, total transaction volume, and/or number of point-of-sale terminals influence merchant perceptions. The authors confirm that merchant preferences are determined by their perceptions and that the intensity of payment use is also important. Furthermore, the authors find that, aside from the initial decision to accept a payment method, merchants have little influence over the payment decisions made by consumers. These last two findings are indicative of the two-sided nature of payments. The marginal costs of accepting payment methods are also estimated and compared, and payment card processing fees are examined.

Suggested Citation

  • Carlos Arango & Varya Taylor, 2008. "Merchant Acceptance, Costs, and Perceptions of Retail Payments: A Canadian Survey," Discussion Papers 08-12, Bank of Canada.
  • Handle: RePEc:bca:bocadp:08-12
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    File URL: http://www.bankofcanada.ca/en/res/dp/2008/dp08-12.pdf
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    Citations

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    Cited by:

    1. 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.
    2. Carbó-Valverde, Santiago & Liñares-Zegarra, José M., 2011. "How effective are rewards programs in promoting payment card usage? Empirical evidence," Journal of Banking & Finance, Elsevier, vol. 35(12), pages 3275-3291.
    3. repec:mnb:finrev:v:17:y:2018:i:1:p:83-109 is not listed on IDEAS
    4. 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.
    5. repec:kap:revind:v:51:y:2017:i:3:d:10.1007_s11151-016-9543-y is not listed on IDEAS
    6. Chris Stewart & Iris Chan & Crystal Ossolinski & David Halperin & Paul Ryan, 2014. "The Evolution of Payment Costs in Australia," RBA Research Discussion Papers rdp2014-14, Reserve Bank of Australia.
    7. Hayashi, Fumiko & Bradford, Terri, 2014. "Mobile payments : merchants’ perspectives," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 33-58.
    8. Monnet, Cyril & Roberds, William, 2008. "Optimal pricing of payment services," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1428-1440, November.
    9. Verdier, Marianne, 2012. "Interchange fees and inefficiencies in the substitution between debit cards and cash," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 682-696.
    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. Anna Creti & Marianne Verdier, 2011. "Fraud, Investments and Liability Regimes in Payment Platforms," EconomiX Working Papers 2011-31, University of Paris Nanterre, EconomiX.

    More about this item

    Keywords

    Bank notes;

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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