In this article we empirically analyze how the Tourist Test methodology affects the level of multilateral interchange fees (MIFs) for debit card payments over time. Using Dutch cost data for 2002 and 2009 we argue that this method leads to rising cost for merchants in the long run. The outcomes...

Related links: http://www.richmondfed.org/publications/research/region_focus/2011/q2/policy_update_weblinks.cfm

In recent years, the financial services industry has become very inventive around new uses of technology to improve the structure and delivery of retail products. One relatively new type of payment product, stored value cards (SVCs), serves as a cash or check alternative. At this point in the...

We analyze the no surcharge rule (NSR) and its impact on merchant competition by comparing different surcharging regimes. Any constraint on surcharging, including the NSR is shown to be a competition-softening device. A NSR may induce socially excessive card use. Allowing imperfectly competitive...

Since their introduction in the USA in 2002, contactless card payment systems have been widely regarded as the pinnacle of current retail banking technology. However, the potential demand and usage of this innovation has hitherto received little attention from the academic community. Ours is one...

When commerce goes electronic, the means of paying for goods and services must also go electronic. Thus, for electronic commerce it is also necessary to change payment mode from physical to logical. Many businesses accept payment by card for their goods and services and this can undoubtedly...

We conduct an incentivized experiment to test whether the willingness to pay is higher for debit cards compared to cash for three consumer products. Our findings support this conjecture also after controlling for cash availability, spending type, price familiarity and consumption habits of the...

Germans are still very fond of using cash. Of all direct payments transactions in 2008, cash accounted for an astounding 82 % in terms of number and for 58 % in terms of value. With a dataset that combines transaction information with survey data on payment behaviour of German consumers, we...

Starting in 2011, when new regulations capped the interchange fees paid to banks for debit card transactions, some news reports predicted banks might increase checking account fees. The cap reduced many banks' revenue and the concern was that they might offset their losses by charging more for...