Merchant acceptance of cash and credit cards at the point of sale

Ben Fung, Kim Huynh, Kerry Nield and Angelika Welte

Journal of Payments Strategy & Systems, 2018, vol. 12, issue 2, 150-165

Abstract: Recent data show that the use of credit cards in Canada has been increasing, while the use of cash has been declining. At the same time, only two-thirds of small or medium-sized enterprises accept credit cards. To better understand the future development of this trend, it is important to study whether a change in merchant fees will increase credit card acceptance and thus further reduce cash use. To this end, this paper calculates the level of merchant fee where a merchant would be indifferent to accepting a credit card or cash payment, using the merchant indifference test. The study finds that the results are sensitive to the underlying assumptions. The paper also discusses the key issues of applying such a methodology to Canada.

Keywords: merchant indifference test; cash; credit cards; sensitivity analysis (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Working Paper: Merchant Acceptance of Cash and Credit Cards at the Point of Sale (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jpss00:y:2018:v:12:i:2:p:150-165

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