Wait a minute: the efficacy of discounting versus nonpecuniary payment steering

Angelika Welte

Journal of Financial Market Infrastructures

Abstract: ABSTRACT Merchants who accept credit cards face payment-processing fees. In most countries,;the no-surcharge rule prohibits them from using surcharges to pass these fees on to;customers. However, merchants are allowed to steer consumers toward less costly;payment methods by offering discounts or using nonpecuniary incentives such as;convenience and speed. Drawing upon microdata from a survey of Canadian households,;I estimate a discrete choice model of consumers' payment methods to establish;merchant costs for both of these strategies. I find that, while discounts are unprofitable;because they subsidize a large portion of consumers who are already using cash;and debit cards, nonpecuniary steering can be an effective strategy for transactions;above $25.

References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.risk.net/journal-of-financial-market-i ... ary-payment-steering (text/html)

Related works:
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: https://EconPapers.repec.org/RePEc:rsk:journ7:2462101

Access Statistics for this article

More articles in Journal of Financial Market Infrastructures from Journal of Financial Market Infrastructures
Bibliographic data for series maintained by Thomas Paine ().