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- Title
THE ROLE OF INTERCHANGE FEES IN TWO-SIDED MARKETS: AN EMPIRICAL INVESTIGATION ON PAYMENT CARDS.
- Authors
Valverde, Santiago Carbó; Chakravorti, Sujit; Fernández, Francisco Rodríguez
- Abstract
We study the impact of reductions in interchange fees on payment card services. We find that consumer and merchant acceptance and transaction volumes increased when interchange fees were reduced. Our results suggest that a 10% reduction in the rate of decline per quarter in the average interchange fee by an acquirer resulted in a rate of increase in merchant acceptance per quarter of up to 1.4%. In addition, a 10% increase in the rate of interaction of merchant acceptance and the total number of cards increased the rate of quarterly issuer transaction volumes up to 1.7%.
- Subjects
INTERCHANGE fees (Banking); INTEREST rates; CREDIT card fees; CONSUMER behavior; MONETARY policy
- Publication
Review of Economics & Statistics, 2016, Vol 98, Issue 2, p367
- ISSN
0034-6535
- Publication type
Article
- DOI
10.1162/REST_a_00502