An Empirical Analysis of Payment Card Usage

Marc Rysman

No WP2006-002, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

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.

Keywords: payment cards; two-sided markets; network effects (search for similar items in EconPapers)
JEL-codes: L14 L80 (search for similar items in EconPapers)
Pages: 35pages
Date: 2006-01
New Economics Papers: this item is included in nep-cba, nep-com, nep-mic, nep-mkt and nep-net
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Citations: View citations in EconPapers (27)

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Journal Article: AN EMPIRICAL ANALYSIS OF PAYMENT CARD USAGE* (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:bos:wpaper:wp2006-002

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