Please use this identifier to cite or link to this item: https://doi.org/10.1016/j.jbankfin.2010.02.026
Title: Credit card interchange fees
Authors: Rochet, J.-C.
Wright, J. 
Keywords: Credit cards
Payments
Two-sided markets
Issue Date: 2010
Source: Rochet, J.-C., Wright, J. (2010). Credit card interchange fees. Journal of Banking and Finance 34 (8) : 1788-1797. ScholarBank@NUS Repository. https://doi.org/10.1016/j.jbankfin.2010.02.026
Abstract: We build a model of credit card pricing that explicitly takes into account credit functionality. In the model a monopoly card network always selects an interchange fee that exceeds the level that maximizes consumer surplus. If regulators only care about consumer surplus, a conservative regulatory approach is to cap interchange fees based on retailers' net avoided costs from not having to provide credit themselves. This always raises consumer surplus compared to the unregulated outcome, sometimes to the point of maximizing consumer surplus. © 2010 Elsevier B.V.
Source Title: Journal of Banking and Finance
URI: http://scholarbank.nus.edu.sg/handle/10635/22362
ISSN: 03784266
DOI: 10.1016/j.jbankfin.2010.02.026
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