Economics at your fingertips  

Why Don’t Most Merchants Use Price Discounts to Steer Consumer Payment Choice?

Tamás Briglevics () and Oz Shy ()

Review of Industrial Organization, 2014, vol. 44, issue 4, 367-392

Abstract: Recent legislation and court settlements in the United States allow merchants to use price discounts to steer customers to pay with means of payment that are less costly to merchants. We use transaction data to compute rough estimates of the expected net cost reduction by merchant type of giving debit card and cash price discounts. We find that steering consumers to debit and cash via simple price discounts reduces most merchants’ card processing cost; however, this reduction is small and may be insufficient to offset the increase in the cost of administering price menus that vary by payment instrument. Copyright Springer Science+Business Media New York 2014

Keywords: Steering payment methods; Price discounts; Card surcharges; Merchant discount fee; Swipe cost; Payment instruments; Payment methods; E42 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Why don’t most merchants use price discounts to steer consumer payment choice? (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11151/PS2

DOI: 10.1007/s11151-014-9419-y

Access Statistics for this article

Review of Industrial Organization is currently edited by L.J. White

More articles in Review of Industrial Organization from Springer, The Industrial Organization Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2022-01-13
Handle: RePEc:kap:revind:v:44:y:2014:i:4:p:367-392