The paper analyzes the cooperative determination of the interchange fee by member banks in a payment card association. The interchange fee is the “access charge” paid by the merchants’ banks, the acquirers, to cardholders’ banks, the issuers. The paper develops a framework in which banks and merchants may have market power and consumers and merchants decide rationally on whether to buy or accep...

The Internet introduces a new global marketplace for a large number of relatively unknown and often small companies often offering substitutive or complimentary products and services. The merchants profit from reduced costs, reduced time, and unsold stocks. Customers are attracted by increasing convenience and fast fulfillment. Merchants offering these products and services on this new marketpl...

OBJECTIVE To identify and to discuss factors influencing illegal merchant sales of tobacco to underage people in Ontario, Canada. DESIGN Results were obtained through random retail compliance checks of tobacco merchants. A multivariate analysis specified the relationship between selected independent variables and the willingness of tobacco merchants to sell to minors. The selected independent...

In this article, we present a theoretical model to study the ability of banks to influence the consumer’s payment instrument choice. Unlike most two-sided market models where benefits are exogenous, we explicitly consider how consumers’ utility and merchants’ profits increase from additional sales resulting from greater security and access to credit lines. Consumers participate in payment card ...

Debit cards have become an indispensable part of the U.S. payments system, accounting for more than a third of consumer payments at point of sale. With this development has come controversy: Card networks charge merchants fees that merchants believe are too high. And most of the fees are ad valorem—that is, based on transaction value—rather than fixed fees per transaction. Merchants are critica...

Some retail payment systems can be modelled as two-sided markets, where a payment system facilitates money exchanges between consumers on one side and merchants on the other. The system sets rules and standards, to ensure usage and acceptance of its payment instruments by consumers and merchants respectively. Some retail payment systems exhibit indirect network externalities, which is one of th...

Daily deals platforms such as Amazon Local, Google Offers, GroupOn, and LivingSocial have provided a new channel for merchants to directly market to consumers. In order to maximize consumer acquisition and retention, these platforms would like to offer deals that give good value to users. Currently, selecting such deals is done manually; however, the large number of submarkets and localities ne...