Interchange Fees and Ine¢ ciencies in the Substitution between Payment Cards and Cash

نویسنده

  • Marianne Verdier
چکیده

This article explains why the collective determination of interchange fees in payment platforms and in ATM networks can lead to ine¢ ciencies in the substitution between payment cards and cash. If the issuers are ATM owners, I show that the pro…t maximising interchange fees re‡ect the trade-o¤ that banks make between the pro…ts on foreign withdrawals and the possibility to save the costs of cash. Social welfare can be increased by regulating interchange fees, and regulatory interventions should be guided by empirical measures of the costs of cash for banks and merchants. JEL Codes: G21, L31, L42.

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تاریخ انتشار 2010