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The Economics of Credit Cards, Debit Cards and ATMs: A Survey and Some New Evidence

Author

Listed:
  • Carbó Valverde Santiago

    (UNIVERSITY OF GRANADA FEDERAL RESERVE BANK OF CHICAGO)

  • Massoud Nadia

    (UNIVERSITY OF GRANADA UNIVERSITY OF ALBERTA NEW YORK UNIVERSITY)

  • Rodríguez-Fernández Francisco

    (UNIVERSITY OF GRANADA)

  • Saunders Anthony

    (NEW YORK UNIVERSITY)

  • Scholnick Barry

    (UNIVERSITY OF ALBERTA)

Abstract

This working paper provides a critical survey of the large and diffuse literature on credit cards, debit cards and ATMs. We argue that because there are still many outstanding issues and questions about the pricing, use and substitutability of these payment mechanisms, that there are significant further opportunitiesfor research in these areas. A large number of questions are examined in this survey, including the pricing of credit cards, the impact of networks on the provision and pricing of ATMs, as well as the tradeoffs that consumers make between different types of payment mechanism, including debit cards, credit cards and ATMs. Importantly, this paper is also amongst the first to provide new evidence on this latter question from bank level data (from Spain). We conclude that point of sale (debit card) and ATM transactions are substitutes, and that ATM surcharges impact point of sale volume significantly.

Suggested Citation

  • Carbó Valverde Santiago & Massoud Nadia & Rodríguez-Fernández Francisco & Saunders Anthony & Scholnick Barry, 2007. "The Economics of Credit Cards, Debit Cards and ATMs: A Survey and Some New Evidence," Working Papers 201074, Fundacion BBVA / BBVA Foundation.
    • Handle: RePEc:fbb:wpaper:201074
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