This paper examines how competition among payment card networks three-party scheme networks and four-party scheme networks affects pricing as well as the welfare of various parties. A competing network has an incentive to provide rewards to its card users. By providing more generous rewards than...

Interchange fees and related issues in credit and debit card markets have been the focus of considerable attention in recent years. The academic community has begun to address the economics of these markets. Public officials have begun to address the policy implications of developments in these...

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?...

It has been three years since we published A Guide to the ATM and Debit Card Industry. Those three years represent a very dynamic time in the industry with a number of important developments. Some trends and patterns have persisted or accelerated, while others have peaked or reversed. Still...

This paper presents models that explain why merchants accept payment cards even when the fees they face exceed the transactional benefits they receive from a card transaction. Such merchant behaviors can be explained by competition among merchants and/or the effectiveness of the merchant’s...

This paper presents a model for the credit card industry, where oligopolistic card networks price their products in a complex marketplace with competing payment instruments, rational consumers/merchants, and competitive card issuers/acquirers. The analysis suggests that card networks demand...

Nonbanks have always been a key component of the nation's payments system. In recent years, however, nonbanks have become even more prominent. This heightened visibility raises several questions. In which payments activities are nonbanks engaged? What roles do nonbanks play in specific payments...

The payment industry is undergoing significant change. Consolidations among payment networks and processors have been seen in every payment service area and technological advances provide incentives for even larger financial institutions to outsource their transaction processing. As a result, a...

Retail payments systems around the world have entered a period of dramatic change. This conference explored the changing retail payments landscape and assessed the extent to which central bank payments policies should correspondingly be altered. The conference brought together three principal...

We consider an environment in which participants make payments over a network and can invest in a technology that reduces the marginal cost of using the network. A network effect results in multiple equilibria; either all agents invest and usage of the network is high or no agents invest and...