AN EMPIRICAL ANALYSIS OF PAYMENT CARD USAGE*

Marc Rysman

Journal of Industrial Economics, 2007, vol. 55, issue 1, 1-36

Abstract: I exploit a unique data set on the payment card industry to study issues associated with network effects and two‐sided markets. I show that consumers concentrate their spending on a single payment network (single‐homing), although many maintain unused cards that allow the ability to use multiple networks (multi‐homing). Further, I establish a regional correlation between consumer usage and merchant acceptance within the four major networks (Visa, Mastercard, American Express and Discover). This correlation is suggestive of the existence of a positive feedback loop between consumer usage and merchant acceptance.

Date: 2007
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https://doi.org/10.1111/j.1467-6451.2007.00301.x

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Working Paper: An Empirical Analysis of Payment Card Usage (2006)
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