Nonbanks in the Payments System: Vertical Integration Issues

No 07-06, Working Papers from NET Institute

Abstract: We discuss and evaluate the incentives for vertical expansion and vertical mergers in the payments systems industry paying particular attention to the implications of the existence of network effects in this industry. We assess the incentives of large merchants to extend vertically into payments systems, noting that this incentive is maximized when there is significant market power in payments systems and merchants are not sufficiently compensated for the business they bring to the network.

Keywords: payments system; credit cards; debit cards; non-banks; vertical integration; market power; monopoly (search for similar items in EconPapers)
JEL-codes: L13 L42 L50 L80 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-com and nep-ict
Date: Written 2007-08
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Related works:
Working Paper: Nonbanks in the Payments System: Vertical Integration Issues (2007)
Journal Article: Nonbanks in the payments system: vertical integration issues (2007)
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