Competing Payment Systems: Key Insights from the Academic Literature

Most of the academic literature on retail payment systems focuses, for tractability reasons, on the case of a single payment system. However, a more realistic situation is one where several systems compete and where consumers have the choice between several means of payment (debit card, credit card, charge card, cheque, transfer, ...). This article summarises the small literature that has modelled such a situation of competition between different systems. We derive some predictions about the competitive determination of user prices, consumer surplus and social welfare. We suggest some policy implications and also some possible directions for academic research.