Search Results

SORT BY: PREVIOUS / NEXT
Keywords:interchange fees 

Working Paper
Bank Profitability and Debit Card Interchange Regulation: Bank Responses to the Durbin Amendment

The Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 alters the competitive structure of the debit card payment processing industry and caps debit card interchange fees for banks with over $10 billion in assets. Market participants predicted that debit card issuers would offset the reduction in debit interchange revenue by increases in customer account fees. Some participants also predicted that banks would cut costs in response to the law by reducing staff and shutting down branches. Using a difference-in-differences testing strategy, we show that ...
Finance and Economics Discussion Series , Paper 2014-77

Working Paper
Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in the United States and Canada

Using data from the United States and Canada, we quantify consumers’ net pecuniary cost of using cash, credit cards, and debit cards for purchases across income cohorts. The net cost includes fees paid to financial institutions, rewards received from credit or debit card issuers, and the merchant cost of accepting payments that is passed on to consumers as higher retail prices. Even though credit cards are more expensive for merchants to accept compared with other payment methods, merchants typically do not differentiate prices at checkout, but instead pass through their costs to all ...
Working Papers , Paper 20-13

Working Paper
Interchange Fees in Payment Networks: Implications for Prices, Profits, and Welfare

In a two-sided model of the payment card market, we introduce a specific form of elastic demand (constant elasticity), merchant market power, ad valorem fees, and cash as an alternative. We derive the “credit card tax,” consisting of an endogenously determined interchange fee and any rewards paid. We characterize how this tax influences prices, profits, and welfare. We also examine how these relationships vary under different assumptions about the elasticity of demand, merchant market power, and differentiation between cash and credit. Under the assumptions of our model, by endogenizing ...
Working Papers , Paper 25-18

Working Paper
Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in the United States and Canada

Using data from the United States and Canada, we quantify consumers’ net pecuniary cost of using cash, credit cards, and debit cards for purchases across income cohorts. The net cost includes fees paid to financial institutions, rewards received from credit or debit card issuers, and the higher retail prices passed on to consumers to cover merchants’ payment processing costs. Even though credit cards are more expensive for merchants to accept compared with other payment methods, merchants typically do not differentiate prices at checkout but instead pass through their costs to all ...
Research Working Paper , Paper RWP 20-18

FILTER BY year

FILTER BY Content Type

FILTER BY Author

FILTER BY Jel Classification

D12 2 items

D31 2 items

G21 2 items

L81 2 items

E42 1 items

G28 1 items

show more (3)

FILTER BY Keywords

PREVIOUS / NEXT