Card Acceptance and Surcharging: The Role of Costs and Competition
De Nederlandsche Bank (DNB); De Nederlandsche Bank
May 1, 2011
De Nederlandsche Bank Working Paper No. 300
The payment cards market is a two-sided market. Cost sensitivity of both consumers and merchants for card services influences total demand. Survey data of Dutch merchants shows that costs, and competition affect acceptance as well as surcharging decisions. Merchants who find payment cards expensive are less likely to accept them and more likely to surcharge their customers for using them. Merchants who face any competition accept debit card payments relatively more often than merchants with monopoly power, and they are less likely to surcharge their customers for debit card usage. Intense competition leads to higher credit card acceptance.
Number of Pages in PDF File: 37
Keywords: retail payments, merchants, costs, two-sided markets, competition, pricing, surcharging
JEL Classification: D23, D40, E41, G20working papers series
Date posted: October 31, 2011
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