An Introduction to the Economics of Payment Card Networks
Review of Network Economics, Vol. 2, June 2003
17 Pages Posted: 15 Oct 2003
Abstract
Open payment card networks typically coordinate the activities of thousands of financial institutions that issue cards, millions of retail locations that accept them, and several hundred million consumers that use them. This coordination can include the collective setting of certain prices and other controversial network rules. Such practices have recently come under the scrutiny of antitrust authorities in the U.S. and abroad. This article provides a brief overview of the economics of the payment card industry, explaining some of the differences from the textbook model of competitive markets. Such differences are important factors for the antitrust analysis of payment card networks.
JEL Classification: G21, L31, L42
Suggested Citation: Suggested Citation
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