The break of brand exclusivity in Brazilian credit card acquiring: effects and markup-cost decomposition in a price dispersion setting

Gabriel Garber and Marcio Nakane

No 2015_16, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: Visanet monopolized Visa merchant acquiring activities in Brazil while Redecard did the same for MasterCard, until the industry was under authorities’ scrutiny and exclusivity was broken in mid-2010. In this paper, we perform two main tasks. First, we use the knowledge of part of the marginal cost specific to this industry (the interchange fee) to identify markup and marginal cost using individual merchant data. Then, we use this framework to evaluate the impact of the change of the environment on these price components. We find sizable reduction in markup as a result of increased competition.

Keywords: Credit cards; two-sided markets; price discrimination (search for similar items in EconPapers)
JEL-codes: D22 L12 L13 L41 (search for similar items in EconPapers)
Date: 2015-08-10
New Economics Papers: this item is included in nep-com, nep-ger and nep-ind
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The Break of Brand Exclusivity in Brazilian Credit Card Acquiring: effects and markup-cost decomposition in a price dispersion setting (2015)
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