A selected glossary of electronic data interchange and related terms

School of Managemen

The impact of EU price rules: Interchange fee regulation in retail payments. CEPS-ECRI Working Paper 4 February 2020

Debit and credit cards have gradually increased in importance as instruments for retail payments. This has prompted anti-trust authorities at both national and European levels to investigate and limit the interchange fee-based revenue model of four-party schemes. These moves were followed in 2015 by the introduction of the Interchange Fee Regulation (IFR), which introduced price rules to nurture a competitive, innovative and secure payments environment for all stakeholders. The IFR caps the interchange fees on consumer debit and credit cards and prohibits restrictions on co-badging and certain requirements to honour all cards for merchants. This paper assesses the impact of the IFR. Based on a literature review and data analysis, it concludes that the IFR has led to a drop in interchange fees – in some cases below the maximum defined in the legislation in all EU member states. The decrease in the interchange fee is largely reflected in lower charges for merchants, although the reduction is – at least partially – offset by higher scheme fees charged by international four-party card schemes and by higher fees for cardholders. The policy recommendations aim to increase transparency for a fuller understanding of the functioning of the market and to enhance competitiveness in both the market for card payments and other payment instruments

Economics of payment cards: a status report

This article surveys the recent theoretical literature on payment cards (focusing on debit and credit cards) and studies this research's possible implications for the current public policy debate over payment card networks and the pricing of their services for both consumers and merchants.Payment systems ; Credit cards

Interchange fees in credit and debit card markets : what role for public authorities

Credit and especially debit card transactions are on the rise worldwide. Interchange fees are an integral part of the pricing structure of credit and debit card transactions. Indirectly paid by merchants to card issuers, interchange fees in most countries are set by credit and debit card networks. But in one country, Australia, the central bank is regulating interchange fees, and in several other countries and areas, including the European Union, Mexico, the Netherlands, Spain, and the United Kingdom, public officials are taking, or considering taking, a more hands-on regulatory stance. In the United States, it is largely the court system that is debating interchange issues. ; The payments industry has a strong vested interest in interchange fees. They are a major portion of costs that merchants pay for processing debit and credit card payments and are a major source of revenue for banks that issue the cards. One reason for recent interest in interchange fees in the United States is a shift in retail payments away from checks. Research sponsored by the Federal Reserve documents a rise in electronic payments and a decline in the use of paper checks, with a milestone recently passed where the majority of noncash payments are now made using electronic instruments. This shift is also occurring in other countries. Since paper checks typically do not have an interchange fee while credit and debit payments do, the shift is a major reason why merchants face a rapidly rising cost of processing payments. Card issuers, on the other hand, rely on associated revenues to provide a return to their substantial investment in card payment networks. ; Pacheco and Sullivan summarize the proceedings of a conference sponsored by the Federal Reserve Bank of Kansas City, held in Santa Fe, New Mexico, in May 2005, which explored issues surrounding interchange fees. The conference brought together a distinguished group of industry participants, antitrust authorities, central bankers, and academics.Credit cards ; Debit cards ; Payment systems

Interchange fees in card payments

The present paper explores issues surrounding multilateral interchange fees (MIFs) in payment card markets from various angles. The Eurosystem’s public stance on interchange fees is neutral. However, the Eurosystem takes a keen interest in facilitating a constructive dialogue among the stakeholders involved in this debate. Transparency and clarity with respect to the real costs and benefi ts of different payment instruments are indispensable for a modern and harmonised European retail payments market. Interchange fees (if any) should be set at a reasonable level so as to promote overall economic effi ciency in compliance with competition rules. JEL Classification: C43, E31interchange fees, retail payment systems, Trade credit and debit cards, two-sided markets

Interchange fees : network, issuer, acquirer, and merchant perspectives : panel remarks

Debit cards ; Credit cards

E-Finance: An Introduction

" Franklin Allen, James McAndrews and Philip Strahan, October 2001 Abstract: E-finance is defined as "The provision of financial services and markets using electronic communication and computation". In this paper we outline research issues related to e-finance that we believe set the stage for further work in this field. Three areas are focused on. These are the use of electronic payments sys tems, the operations of financial services firms and the operation of financial markets. A number of research issues are raised. For example, is the widespread use of paper-based checks efficient? Will the financial services industry be fundamentally changed by the advent of the internet? Why have there been such large differences in changes to market microstructure across different financial markets?

Payment Card Systems as an Example of two-sided Markets - a Challenge for Antitrust Authorities

This article aims to present the concept of two-sided markets on the example of payment card systems, which have attracted the attention of regulatory and antitrust authorities in recent years. First, the paper offers a few insights into the basic economic theory behind two-sided markets. Second, it presents a brief description of payment card systems and their features. The following analysis focuses on arguments that speak in favour of a regulatory or antitrust intervention into payment card systems. Finally, some of the potential problems that antitrust authorities must face when assessing two-sided markets are presented on the basis of an assessment of the decisional practice of the UOKiK President and the European Commission.two-sided markets, antitrust v. regulation, interchange fees, payment card systems