Competition and Regulation in European Retail Payment Systems

Bank of Finland Discussion Paper No. 16/2003

73 Pages Posted: 24 Sep 2003

Date Written: June 9, 2003


In this study, the interaction between the competition-cooperation nexus and regulation in retail payment systems is analysed by applying the main lessons from the theory of network industries. This is justifiable on the grounds that the payment systems industry inherently has many characteristics in common with network industries. On the other hand, since the provision of payment services also has many special characteristics, the regulatory tools commonly used in many other network industries cannot be applied directly. In general, the main role of payment system regulators is to provide a level playing field for different service providers. To secure dynamic efficiency, the regulators also need to ensure adequate incentives for innovation and investment. In this respect, it is important that they do not take too restrictive an attitude towards cooperation among payment service providers. In addition to general policy analysis, the study also analyses developments in the European retail payment system field and the roles and aims of market participants.

Keywords: Competition policy, payment systems, retail payments, network economics

JEL Classification: D49, G28, L98

Suggested Citation

Kemppainen, Kari, Competition and Regulation in European Retail Payment Systems (June 9, 2003). Bank of Finland Discussion Paper No. 16/2003, Available at SSRN: or

Kari Kemppainen (Contact Author)

Bank of Finland - Research ( email )

P.O. Box 160
FIN-00101 Helsinki
+358-9-1831 (Phone)
+358-9-1832560 (Fax)

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