The Merchant-Bank Struggle for Control of Payment Systems

Journal of Financial Transformation, Vol. 17, pp. 73-84, 2006

12 Pages Posted: 25 May 2006

See all articles by Adam J. Levitin

Adam J. Levitin

Georgetown University Law Center


Merchants and banks are currently engaged in a wide-ranging struggle for control over payment systems. The conflict is playing itself out in business practices, in banking regulation, in corporate governance, in corporate restructuring, in securities offerings, and in the biggest antitrust litigation since AT&T. Yet, it is possible that the extraordinary energy being spent in this fight is for naught, as the growth of national bank brands, technological developments, and innovative business models are likely to result in a radical reshaping of the payments world. This article reviews the factors behind the struggle between merchants and banks and the strategies adopted by each, and questions what impact changes in the payment card industry's structure and the emergence of new payments technologies and business models will have on the merchant-bank contest.

Keywords: interchange, credit card, debit card, payment systems, antitrust, Visa, MasterCard, IPO, PayPal, merchant, bank, network, no-surcharge rule, honor all cards, Wal-Mart, Industrial Loan Corporations, ILC, PLCC, Private Label, Co-Brand

JEL Classification: E44, G20, G21, G34, K21, K22, K23, L1, L4

Suggested Citation

Levitin, Adam J., The Merchant-Bank Struggle for Control of Payment Systems. Journal of Financial Transformation, Vol. 17, pp. 73-84, 2006, Available at SSRN:

Adam J. Levitin (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

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