:: Volume 15, Issue 2 (Spring 2020) ::
J. Mon. Ec. 2020, 15(2): 199-220 Back to browse issues page
Regulating Iranian Card payments System as a Two-Sided Market
Hossein Aghaei1, Reza Talebloo 1, Farhad Khodada Kashi2
1- Allameh Tabataba'i University
2- Department of Economics, Payame Noor University
Abstract:   (328 Views)
This paper examines the necessity of regulating the Iranian card payments system (SHAPARAK) based on the theory of two-sided markets. The expansion of the payment card system in recent years has arisen some questions regarding the role of all kinds of costs and expenses such as interchange fees, cardholder fees, merchant fees, and network externality in balancing the market. Since there is only an interchange fee in Iran, regulation of the card payments system is necessary to assess the variables affecting this system. The data used in this study consist of 1218 observations of 29 banks from March 2016 to August 2019. The econometric method for this purpose is the fixed effects panel data model. The results indicate that the interchange fee has an essential role in balancing the Iranian card payment system market. Also, network externality makes the opportunity for balancing the market by decreasing the interchange fee and finally reducing transaction costs for acquirer banks. This policy can lower the interest rate of the bank loans because, in the Iranian card payment system, cardholders and merchants do not pay fees for transactions. So, banks try to attract clients for issuing cards and receive interchange fees as revenue to compensate for the payment network costs by the interest rate of loans. Overall, the results of the estimated model show that improving the card payments system in Iran should be regulated by related organizations.
Keywords: Payment card system, two sided market, regulation
Full-Text [PDF 687 kb]   (276 Downloads)    
Type of Study: Original Research - Empirical | Subject: Economics
Received: 29 Apr 2020 | Accepted: 28 Dec 2020 | Published: 22 Apr 2020

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Volume 15, Issue 2 (Spring 2020) Back to browse issues page