This report studies how to improve the policies in the Korea credit card market. In particular, this report reviews theories on merchant service charges (MSC’s) for credit card services, explores the credit card market in Korea, and derives how to efficiently regulate the MSC’s.
The credit card market is two-sided in the sense that there exist cross network externalities, which are internalized by credit card network operators. MSC’s are in general high, but they can be passed through on the cardholder by various fees and increased price of the final good. Hence the high MSC’s per se do not cause inefficiency nor decrease welfare in the market. However, when the price of the final good increases, consumers who use non-card payment systems would be worse off, which distorts efficiency of the payment systems. (The rest omitted)
신용카드산업의 시장구조 개선 및 중장기적 발전방안에 관한 연구(A study on the credit card market structure reform and development)
|Series Title; No||정책연구시리즈 / 2013-16|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|