Libre competencia y sistemas de pago
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Transcript of Libre competencia y sistemas de pago
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The purpose of a payment system:
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Currency and Checks
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Checks Direct Presentment
Check Customer (Drawer)
Merchant
Drawee (Issuer)
Bank
Payable at par
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Checks Interbank Presentment
Check Customer (Drawer)
Merchant
Drawee (Issuer)
Bank
Presenting (Acquirer)
Bank
Issuer could withhold fee if presented remotely (by mail).
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Checks Monopoly Bank Towns
Check Customer (Drawer)
Merchant
Drawee (Issuer)
BankPresenting (Acquirer)
Bank
Fee constrained only by (high) transport costs for direct presentment.
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Checks Correspondent Presentment
Check Customer (Drawer)
Merchant
Drawee (Issuer)
Bank Presenting (Acquirer)
Bank
Competition limited fees to transport costs using mail.
Correspondent Bank
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Checks Clearinghouse Settlement
Check Customer (Drawer)
Merchant
Drawee (Issuer)
Bank
Presenting (Acquirer)
Bank
Clearinghouse
Most efficient organization. But created market power and bank cartels.
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Clearinghouse Cartels
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Perfect Competition NeutralityMerchant Bank
Pays $1 Exchange Fee to Consumer
Bank
Consumer Pays $1 in Higher Retail
Prices
Merchant pays $1 More in Bank Fees
Competition Among Issuing
Banks Rebates the $1 to Consumer
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Greshams Law
Acceptance at par in retail transactions enhances market power of monopoly banks and clearinghouse cartels.
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95% of non-par banks were towns with only 1 or 2 banks.
Then, electronic checks were adopted.
No effective competition to eliminate interchange fees in card payments.
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Four-Party Payment Card Systems
Visa Card Customer Merchant
Issuer Bank
Acquirer BankX
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Collective Market Power
In some countries, banks instead formed acquirer monopoly.
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Interchange fee is a Revenue-Sharing Arrangement: Merchant Pays Its Own Bank Plus All Other Banks
Economically equivalent to price fixing cartel, but competition among banks will not erode interchange fee.
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Transbank: Monopoly Card Acquirer
Merchants
Merchants
Merchants
Merchants
Merchants
Merchants Merchant fees
Net paid to bank(implicit interchange fee)
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Interchange Fee = Most of Merchant Fee
Acquirer Fees, 19%
Interchange Fee, 81%
Acquirer Fees, 42%
Interchange Fee, 58%
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Anti-Steering Rules
typesbrandsbank issuers
Enhance market power and lead to higher merchant fees, costs and prices.
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Card Issuers steer with rewards
Merchant pays resulting fees, cannot steer.
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Defenses for Interchange Fees
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Defenses for Interchange Fees
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
Mar
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Merchant Discount Rate (Left Scale)
Merchant Locations (Right Scale)
Australia Reduced Interchange Fees by ~Half
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Defenses for Interchange Fees
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Merchant cash cost Merchant card cost
Mer
chan
t Cos
t
Efficient Pricing When Merchant Costs Are Lower For Cards(No Interchange Fee)
CashPrice
Net Card Price
Discount for card use(or surcharge for cash)
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Merchant cash cost Merchant card cost
Mer
chan
t Cos
t
Efficient Pricing When Merchant Costs Are Higher For Cards
CashPrice
Net Card Price
Surcharge for card use(or discount for cash)
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Merchant cash cost Merchant card cost
Mer
chan
t Cos
t
Price Coherence: Claim Cards Save Costs, But Merchants Cannot Discount Card Transactions:
Everyone Pays Intermediate
Price
(Merchants would prefer to encourage more card use)
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Merchant cash cost Merchant card cost
Mer
chan
t Cos
t
Theoretically Efficient Interchange Fee When Merchant Costs Lower For Cards, Merchants Cannot Steer, and
Issuing is Perfectly Competitive
CashPrice
Net Card Price
(Accomplishes efficient discount for card use)
Interchange Fee Rebated to Cardholder
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Merchant cash cost Merchant card cost
Mer
chan
t Cos
t
Theoretically Efficient Interchange Fee When Merchant Costs Lower For Cards, Merchants Cannot Steer, and
Issuing is Perfectly Competitive
CashPrice
Net Card Price
(Accomplishes efficient discount for card use)
Interchange Fee Rebated to Cardholder
European Union: 0.3% for credit, 0.2% for debit
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Merchant cash cost Merchant card cost
Mer
chan
t Cos
t
But What if IF is Set Too High, Funds are Kept by IssuersAnd No Surcharging is Permitted?
Price to Everyone
With IF
Interchange Fee Kept by Issuer
Price to Everyone With No IF
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Externalities Caused, not Solved, by Unregulated Interchange Fees
$0.30
$0.42 $0.44
$0.61$0.68
$0.57
$0.43
$0.64
$0.47
$1.22
$0.82
$0.57
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
Cash Non-VerifiedCheck
Verified Check Credit/Charge Signature Debit PIN Debit
Average cash transaction size
Average check transaction size
Merchants not indifferent:
Merchant costs, $USD
Source: Visa consultants Garcia-Swartz, Hahn, and Layne-Farrar.
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U.S. Credit Card Access by Family Income
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970 1977 1983 1989 1995 1998 2001 2004 2007
< 20% 20%39.9% 40%59.9% 60%79.9% 80%100%Income percentile:
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Intervention in many regions
Argentina Estonia Israel Poland
Australia E.U. Italy Portugal
Austria Finland Latvia Romania
Canada France Malaysia S. Korea
Chile Germany Mexico Spain
China Greece Netherlands Switzerland
Columbia Hungary N. Zealand U.K.
Denmark India Norway U.S.A.
Australia Estonia Germany Spain
Belgium E.U. Netherlands Switzerland
Austria Finland N. Zealand U.K.
Canada Hungary Poland U.S.A.
Cyprus Ireland Portugal
Czech Rep. Israel Slovakia
Denmark Malta Slovenia
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Card networks work without high interchange fees
Australia 0.50%
China 0.30%
European Union (2016 generally) 0.30%
France 0.28%
Hungary 0.30%
Malaysia 0.21%
Netherlands 0.30%
Poland 0.30%
Romania 0.30%
Spain 0.30%
Australia 0.22%
Canada 0.00%
Denmark 0.00%
European Union (2016) 0.20%
Hungary 0.20%
Malaysia 0.15%
New Zealand 0.00%
Norway 0.00%
Poland 0.20%
Spain 0.20%
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Lessons from History and Regulation
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Designing Competitive Payments MarketsCentro de Estudios Pblicos, Santiago de Chile6 October 2015The purpose of a payment system:Currency and ChecksChecks Direct PresentmentChecks Interbank PresentmentChecks Monopoly Bank TownsChecks Correspondent PresentmentChecks Clearinghouse SettlementClearinghouse CartelsPerfect Competition NeutralityGreshams LawCompetition Led to Par SettlementFour-Party Payment Card SystemsCollective Market PowerInterchange fee is a Revenue-Sharing Arrangement: Merchant Pays Its Own Bank Plus All Other BanksTransbank: Monopoly Card AcquirerInterchange Fee = Most of Merchant FeeAnti-Steering RulesCard Issuers steer with rewardsDefenses for Interchange FeesDefenses for Interchange FeesDefenses for Interchange FeesSlide Number 23Slide Number 24Slide Number 25Slide Number 26Slide Number 27Slide Number 28Externalities Caused, not Solved, by Unregulated Interchange FeesU.S. Credit Card Access by Family IncomeIntervention in many regionsCard networks work without high interchange feesLessons from History and [email protected]