Competing Payment Schemes

Graeme Guthrie () and Julian Wright ()

Departmental Working Papers from National University of Singapore, Department of Economics

Abstract: This paper presents a model of competing payment schemes. Unlike previous work on generic twosided markets, the model allows for the fact that in a payment system users on one side of the market (merchants) compete to attract users on the other side (consumers who may use cards for purchases). It analyzes how competition between card associations and between merchants affects the choice of interchange fees, and thus the structure of fees charged to cardholders and merchants. Implications for other two-sided markets are discussed.

New Economics Papers: this item is included in nep-lab
Date: Written 2003-09
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