The Economics of Credit Cards, Debit Cards and Atms: A Survey and Some New Evidence

Journal of Banking & Finance, Vol. 32, No. 8, pp. 1468-1483, August 2008

University of Alberta School of Business Research Paper No. 2013-1147

36 Pages Posted: 7 May 2006 Last revised: 25 Jul 2013

See all articles by Barry Scholnick

Barry Scholnick

University of Alberta - Department of Marketing, Business Economics & Law

Nadia Massoud

Melbourne Business School, University of Melbourne

Anthony Saunders

New York University - Leonard N. Stern School of Business

Santiago Carbo-Valverde

Bangor Business School; Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF)

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History

Date Written: April 1, 2006

Abstract

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.

Keywords: Credit Cards, debit cards, point of sale, POS, ATMs, Retail payment system

JEL Classification: C72, D12, D43, D83, G21

Suggested Citation

Scholnick, Barry and Massoud, Nadia and Saunders, Anthony and Carbo-Valverde, Santiago and Rodriguez-Fernandez, Francisco, The Economics of Credit Cards, Debit Cards and Atms: A Survey and Some New Evidence (April 1, 2006). Journal of Banking & Finance, Vol. 32, No. 8, pp. 1468-1483, August 2008; University of Alberta School of Business Research Paper No. 2013-1147. Available at SSRN: https://ssrn.com/abstract=899452 or http://dx.doi.org/10.2139/ssrn.899452

Barry Scholnick (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

Nadia Massoud

Melbourne Business School, University of Melbourne ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia
+61 3 9349 8130 (Phone)
+61 3 9349 8136 (Fax)

HOME PAGE: http://mbs.edu/facultyresearch/facultydirectory/Pages/NadiaMassoud.aspx

Anthony Saunders

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)

Santiago Carbo-Valverde

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF) ( email )

Serrano Anguita 9
Madrid, Madrid 28004
Spain

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History ( email )

Granada
Spain

Register to save articles to
your library

Register

Paper statistics

Downloads
1,469
Abstract Views
6,376
rank
11,794
PlumX Metrics