Jump to ContentJump to Main Navigation
Show Summary Details
More options …

The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

4 Issues per year

IMPACT FACTOR 2016: 0.252
5-year IMPACT FACTOR: 0.755

CiteScore 2016: 0.48

SCImago Journal Rank (SJR) 2016: 0.330
Source Normalized Impact per Paper (SNIP) 2016: 0.526

See all formats and pricing
More options …
Volume 3, Issue 1 (Jan 2003)


Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

The Neutrality of Interchange Fees in Payment Systems

Joshua S Gans / Stephen P King
Published Online: 2003-01-09 | DOI: https://doi.org/10.2202/1538-0653.1069


There has been considerable public debate over the effect of interchange fees on credit card transactions. Regulators in Australia and Europe have argued that these fees can be set by banks to have an anticompetitive effect. In the US, it has been argued that these fees, together with a rule that prevents a surcharge for credit purchases, might create a cross subsidy between cash and credit customers. Academics have noted that, in particular circumstances, interchange fees have no real effects in the absence of such a no-surcharge rule. This paper demonstrates that the potential neutrality of interchange fees is a general result. We show that in the absence of a no surcharge rule or, alternatively, if there is perfect competition at the merchant level, interchange fees can be changed without leading to any real effects. This result does not depend on the degree or nature of competition at either the bank or the merchant level. We conclude that the elimination of no surcharge rules may provide practical policy solutions for authorities concerned about the level of interchange fees.

Keywords: credit card associations; payment systems; interchange fee; neutrality; no surcharge rule

About the article

Published Online: 2003-01-09

Citation Information: Topics in Economic Analysis & Policy, ISSN (Online) 1538-0653, DOI: https://doi.org/10.2202/1538-0653.1069.

Export Citation

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston. Copyright Clearance Center

Citing Articles

Here you can find all Crossref-listed publications in which this article is cited. If you would like to receive automatic email messages as soon as this article is cited in other publications, simply activate the “Citation Alert” on the top of this page.

Michael L. Katz
Review of Industrial Organization, 2017, Volume 50, Number 4, Page 441
Joshua S. Gans and Michael L. Katz
Journal of Regulatory Economics, 2016, Volume 50, Number 1, Page 99
Marcos Valli Jorge and Wilfredo Leiva Maldonado
Journal of Economic Studies, 2016, Volume 43, Number 2, Page 178
Stephen P. King
Australian Economic Review, 2013, Volume 46, Number 2, Page 247
Andrew T. Ching and Fumiko Hayashi
Journal of Banking & Finance, 2010, Volume 34, Number 8, Page 1773
Wilko Bolt, Nicole Jonker, and Corry van Renselaar
Journal of Banking & Finance, 2010, Volume 34, Number 8, Page 1738
Oz Shy
Review of Industrial Organization, 2011, Volume 38, Number 2, Page 119
Marianne Verdier
Journal of Economic Surveys, 2011, Volume 25, Number 2, Page 273
Joshua S. Gans
Journal of Regulatory Economics, 2015, Volume 47, Number 2, Page 183
Journal of Money, Credit and Banking, 2008, Volume 40, Number 1, Page 149
Julian Wright
The RAND Journal of Economics, 2012, Volume 43, Number 4, Page 761
Zhu Wang
International Journal of Industrial Organization, 2010, Volume 28, Number 1, Page 86
Hans Zenger
Journal of Banking & Finance, 2011, Volume 35, Number 10, Page 2544
Benjamin E. Hermalin and Michael L. Katz
The RAND Journal of Economics, 2006, Volume 37, Number 3, Page 692
Jean-Charles Rochet and Jean Tirole
The RAND Journal of Economics, 2006, Volume 37, Number 3, Page 645
Journal of Industrial Economics, 2007, Volume 55, Number 1, Page 37

Comments (0)

Please log in or register to comment.
Log in