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The role of interchange fees in two-sided markets: An empirical investigation on payment cards

Carbo-Valverde, S. and Chakravorti, S. and Rodriguez-Fernandez, F. (2015) The role of interchange fees in two-sided markets: An empirical investigation on payment cards. Review of Economics and Statistics, 98. (In Press)

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Abstract

We study the impact of reductions in interchange fees on payment card services. We find that consumer and merchant acceptance and transaction volumes increased when interchange fees were reduced. Our results suggest that a 10 percent reduction in the rate of decline per quarter in the average interchange fee by an acquirer resulted in a rate of increase in merchant acceptance per quarter of up to 1.4 percent. Additionally, a 10 percent increase in the rate of interaction of merchant acceptance and the total number of cards increased the rate of quarterly issuer transaction volumes up to 1.7 percent.

Item Type: Article
Subjects: Research Publications
Departments: College of Business, Law, Education and Social Sciences > Bangor Business School
Date Deposited: 01 Oct 2015 02:33
Last Modified: 30 Sep 2016 03:11
ISSN: 0034-6535
URI: http://e.bangor.ac.uk/id/eprint/5490
Publisher: MIT Press
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