Template-Type: ReDIF-Paper 1.0

Author-Name: Marc Rysman
Author-X-Name-First: Marc
Author-X-Name-Last: Rysman
Author-Email: mrysman@bu.edu
Author-Workplace-Name: Department of Economics, Boston University

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Title: An Empirical Analysis of Payment Card Usage

Abstract: This paper exploits a unique data set on the payment card industry to study issues associated with network effects and two-sided markets. We show that consumers concentrate their spending on a single payment network (single-homing), although many maintain unused cards that allow the ability to use multiple networks (multi-homing). Further, we establish a regional correlation between consumer usage and merchant acceptance within the four major networks (Visa, Mastercard, American Express and Discover). This correlation is suggestive of the existence of a positive feedback loop between consumer usage and merchant acceptance.

Length:  35pages
Creation-Date: 2006-01
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File-URL: http://people.bu.edu/mrysman/research/EPCU.pdf
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Number: WP2006-002
Classification-JEL: L140, L800
Keywords: payment cards, two-sided markets, network effects
Handle: RePEc:bos:wpaper:WP2006-002