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 *
نویسنده
چکیده
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 analysis also helps explain the card pricing puzzles, particularly the high and rising merchant (interchange) fees. Based on the theoretical framework, we discuss socially desirable payment card fees as well as the interchange fee cap regulation.
منابع مشابه
The 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...
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