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Do Prices Reflect Costs? A study of the price- and cost structure of retail payment services in the Swedish banking sector 2002

Author

Listed:
  • Guibourg, Gabriela

    () (Financial Stability Department, Central Bank of Sweden)

  • Segendorf, Björn

    () (Financial Stability Department, Central Bank of Sweden)

Abstract

We estimate private costs in the Swedish banking sector for the production of payment services and investigate to what extent the price structure reflects the estimated cost structure. We find that (i) banks tend to use two-part tariffs but (ii) variable costs are poorly reflected in transaction fees towards both consumers and corporate customers. (iii) there exist large cross subsidies between different payment services, foremost from acquiring card payments to cash distribution to the public, while payment services as a whole is not subsidized.

Suggested Citation

  • Guibourg, Gabriela & Segendorf, Björn, 2004. "Do Prices Reflect Costs? A study of the price- and cost structure of retail payment services in the Swedish banking sector 2002," Working Paper Series 172, Sveriges Riksbank (Central Bank of Sweden).
    • Handle: RePEc:hhs:rbnkwp:0172
    as

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    File URL: http://www.riksbank.com/upload/WorkingPapers/WP_172.pdf
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    References listed on IDEAS

    as
    1. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    2. Julian Wright, 2004. "The Determinants of Optimal Interchange Fees in Payment Systems," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 1-26, March.
    3. Kirstin E. Wells, 1996. "Are checks overused?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 2-12.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    retail payments; two-part tariffs; private costs; price structure; economies of scale;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L89 - Industrial Organization - - Industry Studies: Services - - - Other

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