Debit card interchange fees generally lead to cash-promoting cross-subsidisation

@inproceedings{Leinonen2011DebitCI,
  title={Debit card interchange fees generally lead to cash-promoting cross-subsidisation},
  author={Harry Leinonen},
  year={2011}
}
Cards and cash are competing payment instruments at point-of-sale. The twosided market platform theory, based on general benefit assumptions, supports the use of multilateral interchange fees for card payments as a means of promoting the use of cards. However, analysis of the issue from the concrete processing cost viewpoint leads to the opposite conclusion: collection of debit card interchange fees by issuers results in subsidisation of cash and so actually promotes the use of cash instead of… CONTINUE READING

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