Regulatory Intervention In Card Payment Systems PDF Download
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| Author | : Eliana Garces |
| Publisher | : |
| Total Pages | : 51 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
Download Regulatory Intervention in Card Payment Systems Book in PDF, ePub and Kindle
This paper assesses the extent to which regulatory intervention targeting interchange fees has been consistent with the economic theory of two-sided markets and examines the available evidence on the impact of these regulations. The last two decades have seen a drive to regulate the interchange fees of open payment card systems that was primarily motivated by merchants' complaints. Although pursuing the same objective of decreasing interchange fees, the theoretical and legal basis for interventions were diverse and often based on questionable premises. Economic research on two sided markets has shown that prices in such markets serve to distribute the costs and benefits of the system among the different types of users in a way that maximizes their voluntary participation. Prices to the different types of users are not mainly determined by costs but by the value that these users indirectly bring to the system, contributing to its attractiveness for other users. Regulatory interventions were mostly founded on a partial analysis of payment card systems and their impact was riddled with unintended consequences. Besides a transfer of rent from consumers and issuing banks to mostly large merchants, there is no empirical evidence that any other policy objectives in the form of overall efficiency or consumer welfare was achieved. Two decades of regulatory intervention in payment card systems provide sufficient evidence to call for much caution for further intervention in an increasingly dynamic and fast changing market.
| Author | : Joshua S. Gans |
| Publisher | : |
| Total Pages | : 26 |
| Release | : 2002 |
| Genre | : |
| ISBN | : |
Download Regulating Interchange Fees in Payment Systems Book in PDF, ePub and Kindle
This paper provides a simple model of 'four party' payment systems designed to consider recent moves to regulate interchange fees and other rules of credit card associations. In contrast to recent formal analyses emphasising the role of network effects in the decisions of customer and merchants to use credit cards, we provide a model without such effects. In so doing, we identify the key role played by customers who determine the choice of payment instrument and hence, impose costs and benefits on other parties to a payment system. This model yields new insights regarding the role played by card association rules as well as confirming results derived elsewhere. In particular, we demonstrate that 'no surcharge' rules can encourage transaction efficiency by eliminating payment instrument choice as a means of price discrimination. We also demonstrate that, even in the absence of network effects, a desire for balance drives both the socially optimal and privately profit maximising choice of interchange fees. The role of the interchange fee is to ensure that the customer internalises the impact of its decisions on other participants to a payment system rather than from a need to account for network effects alone. Thus, the presence or otherwise of network effects should not be the focus of regulatory attention.
| Author | : Todd J. Zywicki |
| Publisher | : |
| Total Pages | : 64 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
Download The Economics of Payment Card Interchange Fees and the Limits of Regulation Book in PDF, ePub and Kindle
Fresh off of the most substantial national liquidity crisis of the last generation and the enactment of sweeping credit card regulation in the form of the Credit CARD Act, Congress continues to deliberate, with a continuing drumbeat of support from lobbyists, a set of new regulations for credit card companies. These proposals, offered in the name of consumer protection, seek to constrain the setting of “interchange fees” - transaction charges integral to payment card systems - through a range of proposed political interventions. This article identifies both the theoretical and actual failings of such regulation. Payment cards are a secure, inexpensive, welfare-increasing payment mechanism largely unlike any other in history. Rather than increasing consumer welfare in any meaningful sense, interchange fee legislation represents an attempt by some merchants to shift costs away from their businesses and onto card issuing banks and cardholders. In particular, bank-issued credit cards offer a dramatic improvement in the efficiency and availability of consumer credit by shifting credit risk from merchants onto banks in exchange for the cost of the interchange fee - currently averaging less than 2% of purchase value. Merchants' efforts to cabin these fees would harm not only consumers but also the merchants themselves as commerce would depend more heavily on less-efficient paper-based payment systems. The consequence of interchange fee legislation, as Australia's experiment with such regulation demonstrates, would be reduced access to credit, higher interest rates for consumers, and the return of the much-loathed annual fee for credit cards. Interchange fee regulation threatens to constrain credit for consumers and small businesses as the American economy begins to convalesce from a serious “credit crunch,” and should be accordingly rejected.
| Author | : Ronald J. Mann |
| Publisher | : Cambridge University Press |
| Total Pages | : 19 |
| Release | : 2006-09-11 |
| Genre | : Law |
| ISBN | : 1139459090 |
Download Charging Ahead Book in PDF, ePub and Kindle
This book was the first comprehensive treatment of credit cards in the global economy. The topic is timely not only because of the attention focused on cards as a contributor to the substantial rise in consumer borrowing, but also because of the role of cards in the recent retrenchment in the US bankruptcy system. Relying on data from the US, the UK, Canada, Australia, and Japan, Charging Ahead includes the first careful statistical analysis of the relation between the rise of credit card use and broader macroeconomic phenomena like consumer borrowing, savings, and bankruptcy. It also provides a broad narrative of how credit cards have come to be used so differently around the world. Finally, it sets out a detailed and coherent program for regulatory intervention grounded in both empirical analysis and the existing theoretical literature.
| Author | : Dmitry Artimovich |
| Publisher | : Dmitry Artimovich |
| Total Pages | : 212 |
| Release | : 2019-02-03 |
| Genre | : Business & Economics |
| ISBN | : |
Download ONLINE PAYMENT SOLUTIONS Book in PDF, ePub and Kindle
In the first Russian textbook on electronic payments Dmitry Artimovich summarized his ten-year experience in the field. Online Payment Solutions uncovers the nuances of acquiring and analyzes in detail the rules of Visa and MasterCard payment systems. This book is conceived as a tutorial for people professionally working in the field of Internet acquiring, experts in online trade, as well as for the general public interested in the topic of electronic payments. The textbook focuses on the the emergence of international payment systems and the reasons that put them on that particular path of development. Each chapter is supplemented with questions for self-control, allowing the reader to use it as a textbook. In addition, the author attempts to reveal the weaknesses and peculiarities of the development of payment card payment systems in Eastern Europe, as well as the imperfections of the Russian and European legislation. The book contains an extensive comparison of the implementation of payment system rules in different countries.
| Author | : Jakub Górka |
| Publisher | : Springer |
| Total Pages | : 181 |
| Release | : 2018-11-29 |
| Genre | : Business & Economics |
| ISBN | : 3030030415 |
Download Interchange Fee Economics Book in PDF, ePub and Kindle
Interchange fees have been the focal point for debate in the card industry, among competition authorities and policy makers, as well as in the economic literature on two-sided markets and on the regulation of market failures. This book offers insight into the economics of interchange fees. First, it explains the nature of two-sided markets/platforms/networks and elaborates on four-party schemes and on the rationale behind interchange fees according to Baxter’s model and its later refinements. It also includes the debate about the optimum level of interchange fees and its determination (“tourist test”), and presents the original framework for assessing the impact of interchange fee regulatory reductions for the market participants: consumers, merchants, acquirers, issuers, and card organisations. The framework addresses three areas of concern in reference to the transmission channels of interchange fee reductions (pass-through) and the card scheme domain (triangle: payment organisation, issuer, acquirer). The book discusses the effects of regulatory interchange fee reductions in Australia, USA, Spain, and, most specifically, Poland. It will be of interest to policy makers, card and payments industry practitioners, academics, and students.
| Author | : Howard H. Chang |
| Publisher | : |
| Total Pages | : 41 |
| Release | : 2006 |
| Genre | : |
| ISBN | : |
Download The Effect of Regulatory Intervention in Two-Sided Markets Book in PDF, ePub and Kindle
The Reserve Bank of Australia reduced interchange fees by almost half thereby eliminating a significant source of revenue to issuers of credit cards. The purpose of this intervention was to align the prices of using various payment instruments with their social costs and thus reduce the use of cards, which the RBA viewed as a socially less efficient payment method than cash, checks, and PIN debit cards. The short-run result of this regulatory intervention has been the following: (1) Bank issuers have increased the fixed prices for cards and thereby recovered between 30 and 40 percent of the loss of interchange fee revenue; this fraction is likely to increase over time as cards renew and new solicitations go out. Bank issuers have not changed the per-transaction fees for cards much. (2) Merchants experienced a very small reduction in their costs. Both theory and limited empirical evidence suggest that the highly concentrated merchant sector in Australia has captured the reduction in interchange fees as profits and has not passed it on in the form of lower consumer prices. (3) The per-transaction price at the point of sale has not changed significantly. Merchants have not generally availed themselves of their right to surcharge card transactions and the per-transaction price faced by consumers from their card issuers has not changed much. Holding the number of cards fixed, the regulatory intervention has not altered prices in a way that could achieve the intent of the intervention. (4) There is relatively little evidence thus far that the intervention has in fact affected the volume of card transactions in Australia as intended by the regulation. (5) In the short-run, the effect of the regulation has been to transfer significant profits to the Australian merchant sector with that transfer being borne partly by bank issuers and partly by cardholders. (6) Since proprietary systems such as American Express were not subject to the pricing regulations and since American Express can enter into deals with banks to issue cards, banks have shifted volume from the regulated association systems to the unregulated proprietary systems.
| Author | : Alberto Heimler |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2010 |
| Genre | : |
| ISBN | : |
Download Payment Cards Pricing Patterns Book in PDF, ePub and Kindle
Antitrust enforcers and regulators are increasingly worried that interchange fees in four-party systems, more than being an instrument for addressing usage externality, had become a collusionary device, setting a floor under which the charges could not go. Competition is not working effectively in card payment systems. The reason is that with the non discrimination rule in place, the cost of payment services is transferred by merchants to all buyers, not just to cardholders. As a result, cardholders (that do not pay for the cost of their choice) tend to use the payment instrument that offers the highest private benefits to them (the one with the better reward system), often the most costly. In turn, issuers tend to offer to consumers the cards that provide the highest interchange fee. This paper shows that eliminating the interchange fee and allowing for both issuers and acquirers to charge cardholders and merchants respectively may lead to the internalization of usage externalities and to markets for payment services to operate more effectively. Furthermore the elimination of the no-discrimination rule may also discipline three party systems, as the Australian example shows.
| Author | : Mario Guadamillas |
| Publisher | : World Bank Publications |
| Total Pages | : 44 |
| Release | : 2001 |
| Genre | : Banks and banking |
| ISBN | : |
Download Securities Clearance and Settlement Systems Book in PDF, ePub and Kindle
How to assess securities clearance and settlement systems, based on international standards and best practices.
| Author | : David S. Evans |
| Publisher | : MIT Press |
| Total Pages | : 388 |
| Release | : 2004-12-17 |
| Genre | : Business & Economics |
| ISBN | : 9780262550581 |
Download Paying with Plastic, second edition Book in PDF, ePub and Kindle
The definitive account of the trillion-dollar payment card industry. The payment card business has evolved from its inception in the 1950s as a way to handle payment for expense-account lunches (the Diners Club card) into today's complex, sprawling industry that drives trillions of dollars in transaction volume each year. Paying with Plastic is the definitive source on an industry that has revolutionized the way we borrow and spend. More than a history book, Paying with Plastic delivers an entertaining discussion of the impact of an industry that epitomizes the notion of two-sided markets: those in which two or more customer groups receive value only if all sides are actively engaged. New to this second edition, the two-sided market discussion provides useful insight into the implications of these market dynamics for cardholder rewards, merchant interchange fees, and card acceptance. The authors, both of whom have researched the industry for more than 25 years, also examine the implications of the recent antitrust cases on the industry as well as other business and technological changes—including the massive consolidation brought about by bank mergers, the rise of the debit card, and the emergence of e-commerce—that could alter the payment card industry dramatically in the years to come.
