Merchant Acceptance of Payment Cards: “Must Take” or “Wanna Take”?

Bounie David (), Abel François and Leo Van Hove
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Bounie David: Telecom ParisTech, CNRS, i3-SES, Department of Economics and Social Sciences (ESS), Paris, France
Leo Van Hove: Vrije Universiteit Brussel, Department of Applied Economics (APEC), Brussels, Belgium

Review of Network Economics, 2016, vol. 15, issue 3, 117-146

Abstract: In recent years, regulators in various parts of the world have capped interchange fees on debit and credit cards. The justification for the caps rests to a large extent on the argument that these cards have, for certain merchants, become must-take cards rather than “wanna-take cards.” That is, there are merchants who accept payment cards not because they bring net convenience benefits but out of fear of losing profitable business to card-accepting competitors. This paper presents an original approach that allows to quantify, for the first time, the relative importance of the two motivations. We find, for the case of France in 2008, that the must-take phenomenon effectively exists, but that it applies to only 5.8–19.8 percent of the card-accepting merchants and to a mere 3.9–13.5 percent of all retailers.

Keywords: interchange fees; merchants; must-take cards; network externalities; payment cards; two-sided markets (search for similar items in EconPapers)
JEL-codes: D4 E42 L81 (search for similar items in EconPapers)
Date: 2016
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Related works:
Working Paper: Merchant Acceptance of Payment Cards: Must Takee or Wanna Takee? (2017)
Working Paper: Merchant Acceptance of Payment Cards: “Must Take” or “Wanna Take”? (2016)
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DOI: 10.1515/rne-2017-0011

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