Who Gains and Who Loses from Credit Card Payments?
Author | : Scott Schuh |
Publisher | : DIANE Publishing |
Total Pages | : 57 |
Release | : 2010-11 |
ISBN-10 | : 9781437937015 |
ISBN-13 | : 1437937012 |
Rating | : 4/5 (15 Downloads) |
Download or read book Who Gains and Who Loses from Credit Card Payments? written by Scott Schuh and published by DIANE Publishing. This book was released on 2010-11 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: Merchant fees and reward programs generate an implicit monetary transfer to credit card users from non-card (or ¿cash¿) users because merchants generally do not set differential prices for card users to recoup the costs of fees and rewards. On average, each cash-using household pays $151 to card-using households and each card-using household receives $1,482 from cash users every year. The payment instrument transfer also induces a regressive transfer from low-income to high-income households in general. The authors build and calibrate a model of consumer payment choice to compute the effects of merchant fees and card rewards on consumer welfare. Reducing merchant fees and card rewards would likely increase consumer welfare.