Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153824
Authors: 
Creti, Anna
Verdier, Marianne
Year of Publication: 
2011
Series/Report no.: 
ECB Working Paper 1390
Abstract: 
In this paper, we discuss how fraud liability regimes impact the price structure that is chosen by a monopolistic payment platform, in a setting where merchants can invest in fraud detection technologies. We show that liability allocation rules distort the price structure charged by platforms or banks to consumers and merchants with respect to a case where such a responsibility regime is not implemented. We determine the allocation of fraud losses between the payment platform and the merchants that maximises the platform's profit and we compare it to the allocation that maximises social welfare.
Subjects: 
fraud
interchange fees
liability
Payment card systems
two-sided markets
JEL: 
G21
L31
L42
Document Type: 
Working Paper

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