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The economics of interchange

10 June 2009  |  4633 views  |  1 Source: The Federal Reserve credit card

The Federal Reserve addresses the policy issues relating to the use of interchange fees in card-based transactions.

This paper is intended to provide background for understanding the interchange fee debate. The paper describes the operation of a typical payment card system, presents a summary of the economic theory underlying interchange fees, and discusses various developments in the US payment cards industry, as well as legal and regulatory developments abroad. The paper concludes with a discussion and critical evaluation of a number of potential policy interventions.» Download the document now 1.1 mb (PDF File)

Comments: (1)

Pierre Orban
Pierre Orban - European Payment Solutions - Brussels 16 July, 2009, 12:12

To respond to the increasing pressure on the interchange business model and the regulation in Europe, the New European Card Scheme, PayFair (www.payfair.eu) is deploying a card scheme  based on a transparant and fair pricing for all stakeholders.  This scheme is based on an open governance whereby retailers and card issuers have direct access to the scheme's rules and regulations to agree upon issuer remuneration and retailer fees.

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