*We thank seminar participants at the University of Auckland, University of Melbourne and University of Toulouse for helpful comments on an earlier version. We also would like to thank two referees and our editor for their very helpful comments. Julian Wright has provided advice to Visa on a number of occasions. The views in this paper are solely our own, as are any errors.
COMPETING PAYMENT SCHEMES*
Version of Record online: 10 APR 2007
The Journal of Industrial Economics
Volume 55, Issue 1, pages 37–67, March 2007
How to Cite
GUTHRIE, G. and WRIGHT, J. (2007), COMPETING PAYMENT SCHEMES. The Journal of Industrial Economics, 55: 37–67. doi: 10.1111/j.1467-6451.2007.00302.x
- Issue online: 10 APR 2007
- Version of Record online: 10 APR 2007
This paper presents a model of competing payment schemes. Unlike previous work on generic two-sided markets, the model allows for the fact that in a payment system, users on one side of the market (merchants) compete to attract users on the other side (consumers, who may use cards for purchases). It analyzes how competition between card associations and between merchants affects the choice of interchange fees, and thus the structure of fees charged to cardholders and merchants. Implications for other two-sided markets are discussed.