Competition and credit and debit card interchange fees: a cross-country analysis

Fumiko Hayashi and Stuart E. Weiner

No PSR WP 05-03, Payments System Research Working Paper from Federal Reserve Bank of Kansas City

Abstract: This paper seeks to provide a bridge between the theoretical and empirical literatures on interchange fees. Specifically, the paper confronts theory with practice by asking, to what extent do existing models of interchange fees match up with actual interchange fee practices in various countries? For each of four countries?Australia, the Netherlands, the UK, and the United States?models that ?best? fit the competitive and institutional features of that country?s payment card market are identified, and the implications of those model are compared to actual practices. Along what competitive dimensions is there alignment? Along what competitive dimensions is there not alignment? What country-specific factors appear to be important in explaining deviations from theoretical predictions? The results suggest that a theory applicable in one country may not be applicable in another, and that similar interchange fee arrangements and regulations may well have different implications in different countries.

Keywords: Credit cards; Debit cards; Competition (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-com and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.kansascityfed.org/documents/715/rwp-We ... ingPaper11-30-05.pdf Full-text (application/pdf)

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:fip:fedkpw:psrwp05-03

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Payments System Research Working Paper from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by Zach Kastens ().