An Introduction to the Economics of Payment Card Networks

Review of Network Economics, Vol. 2, June 2003

17 Pages Posted: 15 Oct 2003

See all articles by Robert M. Hunt

Robert M. Hunt

Consumer Finance Institute, Federal Reserve Bank of Philadelphia

Abstract

Open payment card networks typically coordinate the activities of thousands of financial institutions that issue cards, millions of retail locations that accept them, and several hundred million consumers that use them. This coordination can include the collective setting of certain prices and other controversial network rules. Such practices have recently come under the scrutiny of antitrust authorities in the U.S. and abroad. This article provides a brief overview of the economics of the payment card industry, explaining some of the differences from the textbook model of competitive markets. Such differences are important factors for the antitrust analysis of payment card networks.

JEL Classification: G21, L31, L42

Suggested Citation

Hunt, Robert M., An Introduction to the Economics of Payment Card Networks. Review of Network Economics, Vol. 2, June 2003. Available at SSRN: https://ssrn.com/abstract=451880 or http://dx.doi.org/10.2139/ssrn.451880

Robert M. Hunt (Contact Author)

Consumer Finance Institute, Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States
215-574-3806 (Phone)
215-574-7101 (Fax)

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