Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83739
Authors: 
Alexandrova-Kabadjova, Biliana
Castellanos, Sara G.
García-Almanza, Alma L.
Year of Publication: 
2012
Series/Report no.: 
Working Papers, Banco de México 2012-02
Abstract: 
We investigate the payment card's adoption rate under consumers' and merchants' awareness of network externalities, given two levels of Interchange Fees in a multiagent card market. For the purpose of our research, in multiple instances of the model (scenarios) the investigated effects are analyzed over the complete process of adoption, until the market's saturation point is achieved. For each scenario, a comparison is made between two different levels of Interchange Fees and different degrees of consumers' and merchants' awareness. We model explicitly the interactions between consumers and merchants at the point of sale. We allow card issuers to charge consumers with fixed fees and provide net benefits from card usage, whereas acquirers can charge fixed and transactional fees to merchants.
Subjects: 
two-sided markets
financial services
network formation
JEL: 
D7
D85
G28
L13
Document Type: 
Working Paper
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