We analyse a card payment system to assess the economic impact of the interchange fee. This fee is paid by the bank of the merchant, the acquirer, to the bank of the consumer, the issuer. We build up a mode in order to explore whether the interchange fee can enhance the participation to the...

We build a model of a financial intermediary, in the tradition of Diamond and Dybvig (1983), and show that allowing the intermediary to impose redemption fees or gates in a crisis - a form of suspension of convertibility - can lead to preemptive runs. In our model, a fraction of investors...

A number of jurisdictions are considering imposing price caps on the interchange fees that card issuers receive from merchant acquirers when cardholders pay with their cards. Several have already done so. This paper examines the net impact of these price caps on consumers. The economics of...

Payment networks typically differentiate their interchange fees (IFs) by setting a variety of sector-specific IFs for the same payment card. While the previous literature on IFs has focussed on the optimal level of IFs, this paper addresses the optimal structure of IFs, i.e. whether or not IF...

This paper considers the organization of a single (domestic) payment system. When card issuers that are members of a payment system set their fees individually, this gives rise to a free-riding problem, as in providing access to different customers, card issuers are complements from the...

Australia's payment card regulations are similar to those used in a variety of countries around the world. However, as we argue below, they are complex, open to gaming and have failed to win support from consumers.In this paper, we present an alternative approach to regulation involving direct...