A Cost-Benefit Analysis of a Two-Sided Card Market
- Carbó Valverde, Santiago
- Humphrey, David B.
- Liñares Zegarra, José M
- Rodríguez Fernández, Francisco
ISSN: 1988-8767
Año de publicación: 2008
Número: 383
Tipo: Documento de Trabajo
Otras publicaciones en: Notas técnicas: [continuación de Documentos de Trabajo FUNCAS]
Resumen
Payment cards have increasingly replaced cash and checks for point-of-sale transactions in Spain and other countries. Due to how banks price card transactions-- involving both the consumer and the merchant sides of the market--controversy exists over how well these prices may match the benefits as well as the underlying costs. We present information on the costs and benefits (income) of cards and other payment instruments in Spain. The detailed nature of the data makes it possible to approximate the apparent profitability of card issuers and merchant acquirers in Spain, an additional area of controversy. Finally, since payment costs can fall with increases in transaction volume, we estimate payment scale economies in Spain to illustrate how payment costs may fall in the future if processing operations were consolidated across borders in Europe, as envisioned by SEPA. (136 words)