An Empirical Analysis of Payment Card Pricing in China
نویسندگان
چکیده
We exploit a unique merchant-level dataset from the monopoly payment card network in China to study payment card pricing. We develop hypotheses associating payment card pricing to card penetration rate, profitability and fraud risk. Our empirical analysis uses the variations in those three factors across industries to show that the card network charges a higher merchant discount for industries with lower card penetration rate, higher profitability and higher fraud risk. Moreover, we find that the card network provides quantity discounting to merchants.
منابع مشابه
Working Paper Series the Economics of Two-sided Payment Card Markets: Pricing, Adoption and Usage Wp 12-06 James Mcandrews Federal Reserve Bank of New York the Economics of Two-sided Payment Card Markets: Pricing, Adoption and Usage *
This paper provides a new theory for two-sided payment card markets. Adopting payment cards requires consumers and merchants to pay a fixed cost, but yields a lower marginal cost of making payments. Analyzing adoption and usage externalities among heterogeneous consumers and merchants, our theory derives the equilibrium card adoption and usage pattern consistent with empirical evidence. Our ana...
متن کاملOptimal pricing and ordering policies for perishable products under advance-cash-credit payment scheme
Recently, market globalization and competition have forced companies to find alternative means to boost sales and revenue. The use of the cash flow is increasingly becoming a viable alternative for managers to improve their company’s profitability in a supply chain. In today’s business transactions, a supplier usually asks a manufacturer to pay via the advance-cash-credit (ACC) payment scheme i...
متن کاملProviding Optimal Pricing Model for Urban Bus Services (Tehran Case Study)
Utilities and services can be divided into two types of public and private goods in terms of the nature of pricing. Urban bus services are pure private goods that have positive externality. The Mohering effect is one of the most important externality of bus services, which in fact justifies the philosophy and nature of subsidies by the municipality and the government. In this study, monetary ca...
متن کاملPricing and Welfare Implications of Payment Card Network Competition
This paper examines how competition among payment card networks—three-party scheme networks and four-party scheme networks—affects pricing as well as the welfare of various parties. A competing network has an incentive to provide rewards to its card users. By providing more generous rewards than its rival networks, the network can increase its own card transactions because multihoming cardholde...
متن کاملThe Economics of Two-Sided Payment Card Markets: Pricing, Adoption and Usage
This paper provides a new theory for two-sided payment card markets by positing better microfoundations. Adopting payment cards by consumers and merchants requires a fixed cost, but yields lower marginal costs of making payments. Considering this together with the heterogeneity of consumer income and merchant size, our theory derives card adoption and usage pattern consistent with cross-section...
متن کامل