Why do card issuers charge proportional fees?

Preprint OPEN
Oz Shy; Zhu Wang;
(2008)
  • Subject:
    acm: ComputingMilieux_COMPUTERSANDSOCIETY | ComputingMilieux_PERSONALCOMPUTING | ComputingMilieux_COMPUTERSANDEDUCATION | ComputingMilieux_MANAGEMENTOFCOMPUTINGANDINFORMATIONSYSTEMS

This paper explains why payment card companies charge consumers and merchants fees which are proportional to the transaction values instead of charging a fixed per-transaction fee. Our theory shows that, even in the absence of any cost considerations, card companies ear... View more
  • References (9)

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