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Card acceptance and surcharging: the role of costs and competition

  • Nicole Jonker

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.

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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 300.

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Date of creation: May 2011
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Handle: RePEc:dnb:dnbwpp:300
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Web page: http://www.dnb.nl/en/

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