An Empirical Analysis of Payment Card Usage

38 Pages Posted: 1 Jun 2006

See all articles by Marc Rysman

Marc Rysman

Boston University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2006

Abstract

I exploit a unique data set on the payment card industry to study issues associated with network effects and two-sided markets. I show that consumers concentrate their spending on a single payment network (single-homing), although many maintain unused cards that allow the ability to use multiple networks (multi-homing). Further, I establish a regional correlation between consumer usage and merchant acceptance within the four major networks (Visa, Mastercard, American Express and Discover). This correlation is suggestive of the existence of a positive feedback loop between consumer usage and merchant acceptance.

Keywords: payment cards, two-sided markets, network effects

JEL Classification: L14, L80

Suggested Citation

Rysman, Marc, An Empirical Analysis of Payment Card Usage (May 2006). Available at SSRN: https://ssrn.com/abstract=892591 or http://dx.doi.org/10.2139/ssrn.892591

Marc Rysman (Contact Author)

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States
617-353-3086 (Phone)
617-353-4449 (Fax)

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