The Economics Of Payment Card Fee Structure: Policy Considerations Of Payment Card Rewards

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Executive Summary

In many countries, public authorities have intervened with the payment card industry in general and the payment card fee structure in particular. Some public policy interventions have directly regulated the level of the fees paid by merchants and other interventions have abolished network rules and/or encouraged competition among card networks, aiming to reduce the level of fees paid by merchants. In the United States, public authorities and legislatures have not taken actions regarding the payment card fee structure until very recently. In 2008, the U.S. legislature has introduced two bills in the Congress, which are aiming to change the balance between the merchant fee and the cardholder fee (or rewards).

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