Card Acceptance and Surcharging: The Role of Costs and Competition

37 Pages Posted: 31 Oct 2011

See all articles by Nicole Jonker

Nicole Jonker

De Nederlandsche Bank (DNB); De Nederlandsche Bank

Date Written: May 1, 2011

Abstract

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.

Keywords: retail payments, merchants, costs, two-sided markets, competition, pricing, surcharging

JEL Classification: D23, D40, E41, G20

Suggested Citation

Jonker, Nicole, Card Acceptance and Surcharging: The Role of Costs and Competition (May 1, 2011). De Nederlandsche Bank Working Paper No. 300. Available at SSRN: https://ssrn.com/abstract=1951890 or http://dx.doi.org/10.2139/ssrn.1951890

Nicole Jonker (Contact Author)

De Nederlandsche Bank (DNB) ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

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