Balancing Cooperation and Competition in Retail Payment Systems: Lessons from Latin America Case Studies

"Balancing Cooperation and Competition in Retail Payment Systems: Lessons from Latin America Case Studies" presents the findings of four case studies in Latin America (Argentina, Brazil, Colombia and Mexico) that have explored the issue of cooperation and competition in different retail payments markets, such as the automated clearinghouse (ACH) and cards markets. The study includes an overview of the main issues and policy guidelines derived from the case studies but also from the accumulated expertise of the Bank around the world and available literature on the topic. Thus, the study defines a conceptual framework to better identify the issues involved and propose policy guidelines for the authorities and stakeholders to consider in advacing reforms in the area of retail payment systems and achieve the right balance for a cooperative infrastructure development among market competitors.

[1]  W. Bolt,et al.  Heavily skewed pricing in two-sided markets , 2008 .

[2]  Andrew T. Ching,et al.  Payment Card Rewards Programs and Consumer Payment Choice , 2008 .

[3]  Pablo Fajnzylber,et al.  Informality: Exit and Exclusion , 2007 .

[4]  Nicolas Houy,et al.  The Demand for Currency Versus Debitable Accounts: A Reconsideration , 2007 .

[5]  Julian Wright,et al.  *Competing Payment Schemes , 2007 .

[6]  Marc Rysman.  *An Empirical Analysis of Payment Card Usage , 2007 .

[7]  Massimo Cirasino,et al.  Reforming Payments and Securities Settlement Systems in Latin America and the Caribbean , 2006 .

[8]  J. Rochet,et al.  Two-sided markets: a progress report , 2006 .

[9]  C. Stephanou,et al.  Financial System Structure in Colombia: A Proposal for a Reform Agenda , 2006 .

[10]  M. Meléndez,et al.  Medios de pago electrónicos en Colombia: evolución y perspectivas , 2006 .

[11]  Indre Maurer,et al.  Dynamics of Social Capital and Their Performance Implications: Lessons from Biotechnology Start-ups , 2006 .

[12]  Joseph Farrell,et al.  Efficiency and Competition between Payment Instruments , 2006 .

[13]  J. Rochet,et al.  Externalities and Regulation in Card Payment Systems , 2006 .

[14]  Daniel R. Vincent,et al.  The No Surcharge Rule and Card User Rebates: Vertical Control by a Payment Network , 2006 .

[15]  Elizabeth C. Klee.  Families' Use of Payment Instruments During a Decade of Change in the U.S. Payment System , 2006 .

[16]  T. Solo,et al.  Access to Financial Services in Colombia: The Unbanked in Bogota , 2006 .

[17]  Marianne Verdier.  Retail Payment Systems: What Do We Learn from Two-Sided Markets? , 2006 .

[18]  Y. Spiegel,et al.  The Credit Card Industry in Israel , 2005 .

[19]  Stuart E. Weiner,et al.  Interchange Fees in Various Countries: Developments and Determinants , 2005 .

[20]  J. Negrín.  The Regulation of Payment Cards: The Mexican Experience , 2005 .

[21]  J. Ordover,et al.  Merchant Benefits and Public Policy towards Interchange: An Economic Assessment , 2005 .

[22]  Andras Niedermayer.  Does a Platform Owning Monopolist Want Competition , 2005 .

[23]  W. Bolt,et al.  The Effect of Transaction Pricing on the Adoption of Electronic Payments: A Cross-Country Comparison. , 2005 .

[24]  W. Bolt,et al.  Social Welfare and Cost Recovery in Two-Sided Markets , 2005, SSRN Electronic Journal.

[25]  Daniel E. Nolle,et al.  ACH Payments: Changing Users and Changing Uses , 2005 .

[26]  H. Brits,et al.  Payments are no free lunch , 2005 .

[27]  Sujit Chakravorti,et al.  Innovations, incentives, and regulation: forces shaping the payments environment , 2005 .

[28]  W. Bolt,et al.  Public Good Issues in Target: Natural Monopoly, Scale Economies, Network Effects and Cost Allocation , 2005, SSRN Electronic Journal.

[29]  M. Armstrong.  Competition in Two-Sided Markets ¤ , 2005 .

[30]  Richard Schmalensee,et al.  The Economics of Interchange Fees and Their Regulation: An Overview , 2005 .

[31]  M. Bergman.  Two-sided network effects, bank interchange fees, and the allocation of fixed costs , 2005 .

[32]  Wilko Bolt,et al.  Skewed Pricing in Two-Sided Markets: An Io Approach , 2005 .

[33]  Anne Layne-Farrar,et al.  The Move Toward a Cashless Society: A Closer Look at Payment Instrument Economics , 2004 .

[34]  Attila Ambrus,et al.  Network Markets and Consumer Coordination , 2004, SSRN Electronic Journal.

[35]  Volker Nocke,et al.  Platform Ownership , 2004 .

[36]  R. Roson,et al.  Platform Competition in Two-Sided Markets: The Case of Payment Networks , 2004 .

[37]  Koki Arai.  Elimination of Competitors: Some Economics of Payment Card Associations , 2004 .

[38]  Julian Wright,et al.  Multihoming and Compatibility , 2003 .

[39]  Julian Wright.  One-sided Logic in Two-sided Markets , 2003 .

[40]  Julian Wright,et al.  Pricing in debit and credit card schemes , 2003 .

[41]  Kari Kemppainen.  Competition and Regulation in European Retail Payment Systems , 2003 .

[42]  David B. Humphrey,et al.  What Does it Cost to Make a Payment? , 2003 .

[43]  Jean-Charles Rochet,et al.  An Economic Analysis of the Determination of Interchange Fees in Payment Card Systems , 2003 .

[44]  J. Rochet.  The Theory of Interchange Fees: A Synthesis of Recent Contributions , 2003 .

[45]  Joshua S. Gans,et al.  Approaches to Regulating Interchange Fees in Payment Systems , 2003 .

[46]  J. Rochet,et al.  Platform competition in two sided markets , 2003 .

[47]  J. Vickers,et al.  Multiproduct Price Regulation under Asymmetric Information. , 2003 .

[48]  P. Bauer,et al.  Scale Economies, Scope Economies, and Technical Change in Federal Reserve Payment Processing , 2002 .

[49]  Jean-Charles Rochet,et al.  Cooperation Among Competitors: Some Economics of Payment Card Associations , 2002 .

[50]  David S. Evans,et al.  The Antitrust Economics of Two-Sided Markets , 2002 .

[51]  Robin C. Sickles,et al.  Scope and scale economies in Federal Reserve payment processing , 2002 .

[52]  Geoffrey R. Gerdes,et al.  The Use of Checks and Other Noncash Payment Instruments in the United States , 2002 .

[53]  Julian Wright,et al.  Optimal Card Payment Systems , 2002 .

[54]  Stephen P. King,et al.  Regulating Interchange Fees in Payment Systems , 2001 .

[55]  Julian Wright,et al.  The Determinants of Optimal Interchange Fees in Payment Systems , 2001 .

[56]  Stephen P. King,et al.  The Neutrality of Interchange Fees in Payment Systems , 2001 .

[57]  Devi R. Gnyawali,et al.  Cooperative Networks and Competitive Dynamics: a Structural Embeddedness Perspective , 2001 .

[58]  Biagio Bossone,et al.  The oversight of the payments systems : a framework for the development and governance of payment systems in emerging economies , 2001 .

[59]  Richard Schmalensee,et al.  Payment Systems and Interchange Fees , 2001 .

[60]  R. Prager.  The Effects of ATM Surcharges on Small Banking Organizations , 2001 .

[61]  Jukka M. Vesala,et al.  Substitution of Noncash Payment Instruments for Cash in Europe , 2000 .

[62]  Don William Cruickshank,et al.  Competition in UK Banking: A Report to the Chancellor of the Exchequer , 2000 .

[63]  Willem C. Boeschoten,et al.  Cash Management, Payment Patterns and the Demand for Money , 1998 .

[64]  Robert Deyoung,et al.  Comment on Scale Economies, Cost Efficiencies, and Technological Change in Federal Reserve Payments Processing , 1996 .

[65]  A. Crede.  Expertise and innovation: Information technology strategies in the financial services sector: R. Fincham, J. Fleck, R. Proctor, H. Scarbrough, M. Tierney and R. Williams, (Clarendon Press, Oxford, 1994, 334 pp.), [UK pound]35.00, ISBN 0 19 828904 9 , 1996 .

[66]  Stephen Martin.  R & D joint ventures and tacit product market collusion , 1996 .

[67]  Robert Montes-Negret Fernando Listfield,et al.  Payment Systems in Latin America: A Tale of Two Countries - Colombia and El Salvador , 1995 .

[68]  D. Hancock,et al.  Scale economies and technological change in Federal Reserve ACH payment processing , 1995 .

[69]  R. Procter,et al.  Expertise and Innovation: Information Technology Strategies in the Financial Services Sector , 1995 .

[70]  E. Mansfield.  The Diffusion of Flexible Manufacturing Systems in Japan, Europe and the United States , 1993 .

[71]  Daniel A. Levinthal,et al.  ABSORPTIVE CAPACITY: A NEW PERSPECTIVE ON LEARNING AND INNOVATION , 1990 .

[72]  H S Luft,et al.  Competition and regulation. , 1985, Medical care.

[73]  William F. Baxter,et al.  Bank Interchange of Transactional Paper: Legal and Economic Perspectives , 1983, The Journal of Law and Economics.

[74]  F. Ramsey.  A Contribution to the Theory of Taxation , 1927 .

[75]  G. G. Ide,et al.  Debit or Credit , 1919, The Psychological clinic.

[76]  Christopher M. Snyder,et al.  Consumer Homing on Payment Cards: From Theory to Measurement , 2008 .

[77]  J. Rochet,et al.  Must-Take Cards and the Tourist Test , 2007 .

[78]  J. Gans.  Evaluating the Impact of the Payment System Reforms , 2007 .

[79]  Brye Steeves.  A guide to the ATM and debit card industry , 2007 .

[80]  Zhu Wang.  Market Structure and Credit Card Pricing: What Drives the Interchange? , 2006 .

[81]  Guillermo Ortiz.  Remarks on interchange fees: central bank perspectives and options , 2005 .

[82]  John Vickers,et al.  Public policy and the invisible price : competition law, regulation, and the interchange fee , 2005 .

[83]  John Simon.  Payment Systems Are Different: Shouldn't Their Regulation Be Too? , 2005 .

[84]  Stuart E. Weiner,et al.  Competition and credit and debit card interchange fees: a cross-country analysis , 2005 .

[85]  Sveriges Riksbank.  Do Prices Reflect Costs ? A study of the price-and cost structure of retail payment services in the Swedish banking sector 2002 , 2004 .

[86]  J. Rochet,et al.  Defining Two-Sided Markets , 2004 .

[87]  Julian Wright,et al.  Two-sided markets with multihoming and exclusive dealing , 2004 .

[88]  J. Rochet,et al.  Tying in Two-Sided Markets and The Impact of the Honor All Cards Rule , 2003 .

[89]  M. Bergman.  Payment system efficiency and pro-competitive regulation , 2003 .

[90]  W. Bolt.  Retail Payments in the Netherlands: some Facts and Some Theory , 2003 .

[91]  J. Stavins.  Effect of consumer characteristics on the use of payment instruments , 2002 .

[92]  Oz Shy,et al.  The Economics of Network Industries , 2002 .

[93]  Working Paper.  WESTERN HEMISPHERE PAYMENTS AND SECURITIES CLEARANCE AND SETTLEMENT INITIATIVE INICIATIVA DE COMPENSACIÓN Y LIQUIDACIÓN DE PAGOS Y VALORES DEL HEMISFERIO OCCIDENTAL , 2001 .

[94]  A. Felix,et al.  FEDERAL RESERVE BANK OF KANSAS CITY , 1999 .

[95]  S. Salop,et al.  Deregulating Self-Regulated Shared Atm Networks , 1990 .

[96]  M. Perry.  Vertical integration: Determinants and effects , 1989 .

[97]  Joseph Farrell,et al.  Installed base and compatibility : innovation, product preannouncements and predation , 1986 .

[98]  Hiroshi Ohta,et al.  Related Market Conditions and Interindustrial Mergers , 1976 .