The Economics of Credit Cards, Debit Cards and ATMs: A Survey and Some New Evidence
University of Alberta - Department of Marketing, Business Economics & Law
York University - Schulich School of Business
New York University - Leonard N. Stern School of Business
Bangor Business School
University of Granada - Department of Economic Theory and History
This paper provides a critical survey of the large and diffuse literature on credit cards, debit cards and ATMs. We argue that because there are still many outstanding issues and questions about the pricing, use and substitutability of these payment mechanisms, that there are significant further opportunities for research in these areas. A large number of questions are examined in this survey, including the pricing of credit cards, the impact of networks on the provision and pricing of ATMs, as well as the tradeoffs that consumers make between different types of payment mechanism, including debit cards, credit cards and ATMs. Importantly, this paper is also amongst the first to provide new evidence on this latter question from bank level data (from Spain). We conclude that point of sale (debit card) and ATM transactions are substitutes, and that ATM surcharges impacts point of sale volume significantly.
Number of Pages in PDF File: 36
Keywords: Credit Cards, debit cards, point of sale, POS, ATMs, Retail payment system
JEL Classification: C72, D12, D43, D83, G21working papers series
Date posted: May 7, 2006
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