Competing Payment Schemes

Guthrie, Graeme; Wright, Julian

doi:10.2139/ssrn.482422

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Competing Payment Schemes

National University of Singapore Economics Working Paper No. 0311

40 Pages Posted: 31 Dec 2003

See all articles by Graeme Guthrie

Julian Wright

National University of Singapore (NUS) - Department of Economics

Date Written: September 9, 2003

Abstract

This paper presents a model of competing payment schemes. Unlike previous work on generic two-sided markets, the model allows for the fact that in a payment system users on one side of the market (merchants) compete to attract users on the other side (consumers who may use cards for purchases). It analyzes how competition between card associations and between merchants affects the choice of interchange fees, and thus the structure of fees charged to cardholders and merchants. Implications for other two-sided markets are discussed.

Keywords: Two-Sided Markets, Payment Cards, Interchange Fees

JEL Classification: D43, L11, L13

Suggested Citation: Suggested Citation

Guthrie, Graeme and Wright, Julian, Competing Payment Schemes (September 9, 2003). National University of Singapore Economics Working Paper No. 0311, Available at SSRN: https://ssrn.com/abstract=482422 or http://dx.doi.org/10.2139/ssrn.482422