Impact of interchange fees on a nonsaturated multi‐agent payment card market

Alexandrova-Kabadjova, Biliana

doi:10.1002/isaf.292

Cited by 6 publications

(5 citation statements)

References 10 publications

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“…The results obtained in our simulations are robust to the parameter constellations used; thus, our results can be treated as being generic. In addition, a more detailed analysis of the impact of different levels of consumers and merchants inertia can be found in [20].…”

Section: Simulationsmentioning

confidence: 99%

“…The literature in this field can generally be divided into models with a single payment card, e.g., [12][13][14][15], and those contributions that address the competition between payment cards, see, e.g., [16][17][18][19]. A multi-agent-based four-party scheme model, which studies the effect of interchange fees on the payment card adoption rate, is presented in [20]. Multi-homing in payment card markets, i.e., consumers holding or merchants accepting more than one payment card, has only recently attracted wider interest in the literature despite being very common in the market.…”

Section: Introductionmentioning

confidence: 99%

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Market structure and information in payment card markets

Alexandrova-Kabadjova

Tsang

Krause

2011

Int. J. Autom. Comput.

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This paper investigates the structure of the payment card market, with consumers and merchants basing their subscription decisions on different information sets. We find that the market structure depends crucially on the information set on which consumers and merchants base their subscription decisions. In the studied case, we observe that a market with few cards dominating only emerges when decisions are based on very limited information. Under the same conditions using a complete information set, all cards survive in the long run. The use of an agent-based model, focusing on the interactions between merchants and consumers, as a basis for subscription decisions allows us to investigate the dynamics of the market and the effect of the indirect network externalities rather than investigating only equilibrium outcomes.

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Section: Simulationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Market structure and information in payment card markets

Alexandrova-Kabadjova

Tsang

Krause

2011

Int. J. Autom. Comput.

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“…Immediate debit via electronic payment instruments also removes the usual grace period, a “check float” between purchase day and payment day, thus causing adoption difficulty (Humphrey et al ., ). The successful diffusion of stored‐value cards or smart cards requires increased awareness of both consumers and merchants for multiple payments (Alexandrova‐Kabadjova, ).…”

Section: Literature Reviewmentioning

confidence: 99%

Lottery Payment Cards: A Study of Mental Accounting

Yang

2015

Intell. Sys. Acc. Fin. Mgmt.

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This study analyses the difficulties of using stored-value cards for noncash payment adoption and payment framing behaviour development. This study applies the Rasch model via mental accounting theory to identify unobservable and latent difficulties in adopting noncash payment instruments for lottery participation. Anonymity, a reduction in cash carrying, and convenient purchases have discouraged noncash payment adoptions. However, consumers prefer stored-value cards because they are easy to carry and reduce payment time and long waits. Consumers also develop payment framing behaviour difficulties from crediting up to the maximum stored value and fear of insufficient cash, with preferences for period purchases. Lower income significantly discourages noncash payment adoption and payment framing behaviour development, whereas being of a younger age causes significant payment framing difficulties. Regional variations differ in convenience, anonymity, stored value, balance checking, and indirect donations. The moderating effect between income and age also positively significantly influences noncash payment adoption and payment framing behaviour. payment cards may dominate the successful adoption of payment cards (Humphrey, 2010). However, latent or unobservable difficulties stemming from psychological judgments on cash and noncash payments that cause preliminary obstacles in adopting noncash payment instruments are sparsely discussed. In this study, I examine the hidden difficulties in adopting noncash payment instruments via mental accounting theory. The Rasch model is applied to analyse the difficulties of noncash payment adoption to forecast technology diffusion and saving behaviour, as well as to examine the possible social impact and changes. Self-reported data from holders of cash and of noncash payment instruments in Taiwan are used. The Rasch model is a unidimensional measurement scale that measures raw data based on respondent ability and task difficulty as well as provides reliable and valid results for a small sample size (Jackson et al., 2002;Moral et al., 2006).It is determined that consumers prefer stored-value cards and adopt saving behaviour because of anonymity, reduced cash carrying, convenience, maximum stored values, periodic purchases, and the absence of fear of insufficient cash at point of sale. However, stored-value cards are perceived as difficult to carry and incapable of reducing payment and wait times. The difficulties of using stored-value cards with respect to saving features include the inability to increase indirect donation, crediting small prize amounts, and using a card without an expiration date.Having lower income significantly discourages noncash payment adoption and saving behaviour development, whereas being of younger age significantly causes difficulties in the latter. However, gender, marital status, education, and older age indicate negligible difficulties related to noncash payment adoption and saving behaviour development. Regional variations result in significant difficu...

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“…In 2004 the Mexican Central Bank (Banco de México) was given legal power to assess the competition of the banking industry and to regulate the retail payments services, including the interchange fee ( [23,21]). Since then, the authorities have been closely involved in the price setting in the payment cards market 1 From 2000 to 2007 a significant switch in the consumers preferences of payment methods is observed, in a way that in 2007 the annual average number of cheque transactions per capital was 94, whilst the annual average number of card transactions per capital was 178 ( [18]) and in particular in the determination of the MIF . Four years letter, in 2008 the annual average number of card transactions per cardholders was 9.75 2 , with an annual increase of 16%.…”

Section: Introductionmentioning

confidence: 99%

“…Along this line, in order to go further in the understanding of the underlying complex structure of the market, Alexandrova presented the first agent-based four-party scheme model which studies the MIF 's effect on the payment card adoption rate in a non-saturated market [1]. Through simulation of the consumers' and merchants' decisions related to commercial transactions at the point of sale (POS) and to the choice of payment instruments, the growth of the payment card network is observed at the aggregated level.…”

Section: Introductionmentioning

confidence: 99%