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Card acceptance and surcharging: the role of costs and competition

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  • Nicole Jonker

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 competition 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

  • Nicole Jonker, 2011. "Card acceptance and surcharging: the role of costs and competition," DNB Working Papers 300, Netherlands Central Bank, Research Department.
    • Handle: RePEc:dnb:dnbwpp:300
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    References listed on IDEAS

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    1. repec:eee:jbrese:v:88:y:2018:i:c:p:466-473 is not listed on IDEAS
    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. repec:kap:jfsres:v:52:y:2017:i:1:d:10.1007_s10693-017-0281-6 is not listed on IDEAS
    4. repec:eee:pubeco:v:149:y:2017:i:c:p:1-19 is not listed on IDEAS
    5. 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.
    6. 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.
    7. Wismer, Sebastian, 2013. "Intermediated vs. Direct Sales and a No-Discrimination Rule," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79999, Verein für Socialpolitik / German Economic Association.
    8. Pyykko, Elina, 2011. "Review of the Payment Services Directive: The question of surcharges," ECRI Papers 6290, Centre for European Policy Studies.
    9. 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.
    10. 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.
    11. repec:kap:revind:v:51:y:2017:i:3:d:10.1007_s11151-016-9543-y is not listed on IDEAS
    12. Hayashi, Fumiko & Bradford, Terri, 2014. "Mobile payments : merchants’ perspectives," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 33-58.
    13. 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.

    More about this item

    Keywords

    retail payments; merchants; costs; two-sided markets; competition; pricing; surcharging;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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