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The Impact of Multi-acquiring in the Payment System: Evidence from Uruguayan Financial Inclusion Program

Author

Listed:
  • Gandelman, Néstor
  • Roldán, Flavia
  • Viera, Sofía

Abstract

This paper examines the transition from exclusive card network-acquirer relationships to a multi-acquiring model. Using the case of Uruguay's adoption of multi-acquiring in 2022, as part of a broader financial inclusion program, we document significant market dynamics, including restructured relationships among incumbents and new market entrants. Our analysis, leveraging the Herfindahl-Hirschman Index, reveals decreased market concentration across all payment segments. While fee reductions were initially driven by a government-sponsored price agreement, the increased competition fostered by multi-acquiring stabilized these rates even after the agreement was no longer in effect. Large merchants benefited from enhanced efficiency, but small merchants faced adaptation challenges. These findings underscore the complexities of regulating two-sided payment markets and emphasize the need for balanced interventions to ensure a competitive payment ecosystem.

Suggested Citation

  • Gandelman, Néstor & Roldán, Flavia & Viera, Sofía, 2025. "The Impact of Multi-acquiring in the Payment System: Evidence from Uruguayan Financial Inclusion Program," IDB Publications (Working Papers) 13978, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:13978
    DOI: http://dx.doi.org/10.18235/0013400
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    References listed on IDEAS

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    1. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-1672, September.
    2. Gandelman, Néstor & Lluberas, Rodrigo & Misail, Daniel & IDB Invest, 2023. "The Impact of a Financial Inclusion Program on Household’s Payment Choice, Savings, and Credit," IDB Publications (Working Papers) 12769, Inter-American Development Bank.
    3. Ann Kjos, 2007. "The merchant-acquiring side of the payment card industry; structure, operations, and challenges," Consumer Finance Institute discussion papers 07-12, Federal Reserve Bank of Philadelphia.
    4. Basnayake, Dananjani & Naranpanawa, Athula & Selvanathan, Saroja & Bandara, Jayatilleke S., 2024. "Financial inclusion through digitalization and economic growth in Asia-Pacific countries," International Review of Financial Analysis, Elsevier, vol. 96(PA).
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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