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Merchant Acceptance of Payment Cards: Must Takee or Wanna Takee?

Author

Listed:
  • David Bounie
  • Abel François

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Leo van Hove
Abstract
In recent years, regulators in various parts of the world have capped interchange fees on debit and credit cards. The justification for the caps rests to a large extent on the argument that these cards have, for certain merchants, become must-take cards rather than ‘wanna-take cards'. That is, there are merchants who accept payment cards not because they bring net convenience benefits but out of fear of losing profitable business to card-accepting competitors. This paper presents an original approach that allows to quantify, for the first time, the relative importance of the two motivations. We find, for the case of France in 2008, that the must-take phenomenon effectively exists, but that it applies to only 5.8-19.8 per cent of the card-accepting merchants and to a mere 3.9-13.5 per cent of all retailers.

Suggested Citation

  • David Bounie & Abel François & Leo van Hove, 2017. "Merchant Acceptance of Payment Cards: Must Takee or Wanna Takee?," Post-Print hal-01744543, HAL.
    • Handle: RePEc:hal:journl:hal-01744543
    DOI: 10.2139/ssrn.2969862
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    Cited by:

    1. Rodolfo Maino & Marco Pani, 2024. "Could CBDCs Lead to Cash Extinction? Insights from a “Merchant-Customer” Model," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 30(1), pages 21-45, February.
    2. Shy, Oz, 2022. "Interchange fees with cashless stores, cashless consumers, and cash-only consumers," Economics Letters, Elsevier, vol. 212(C).
    3. Aurazo Jose & Vasquez Jose, 2019. "Merchant Card Acceptance: An Extension of the Tourist Test for Developing Countries," Review of Network Economics, De Gruyter, vol. 18(2), pages 109-139, June.
    4. Egor A. Krivosheya, 2018. "Evaluating Efficient Multilateral Interchange Fees: Evidence from End-User Benefits," HSE Working papers WP BRP 66/FE/2018, National Research University Higher School of Economics.
    5. Geneviève Vallée, 2018. "How Long Does It Take You to Pay? A Duration Study of Canadian Retail Transaction Payment Times," Staff Working Papers 18-46, Bank of Canada.
    6. Aloys Prinz, 2019. "The microeconomics of mobile payments," Netnomics, Springer, vol. 20(2), pages 129-151, December.

    More about this item

    Keywords

    payment cards; merchants; two-sided markets; network externalities; must-take cards; interchange fees;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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