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48 Antitrust Bull. 53 (2003)
Underlying Incentives in Credit Card Networks

handle is hein.journals/antibull48 and id is 61 raw text is: The Antitrust Bulletin/Spring 2003 Underlying incentives in credit card networks BY SUJIT CHAKRAVORTI* and ALPA SHAH** I. Introduction The usage of third-party general-purpose credit cards in the United States has increased dramatically during the last decade.' Credit cards have surpassed checks as the most frequently used payment instrument at the point of sale and are the primary pay- ment instrument for Internet transactions. From 1990 to 1999, credit card transactions more than tripled from 4.6 billion to 14.2 billion in the United States. Dollar volume increased from $337 billion to $1096 billion over the same period.2 * Senior economist at the Federal Reserve Bank of Chicago. ** Graduate student at Columbia University. AUTHORS' NOTE: Tim McHugh and Gozde Yazar provided excellent research assistance. The views expressed are our own and should not be attributed to the Federal Reserve Bank of Chicago or the Federal Reserve System. This article focuses only on general-purpose credit cards. Retailer- issued charge and credit cards preceded both general-purpose charge and credit cards in the United States. However, general-purpose cards account for 5.5 times as many transactions and over 9 times the total dol- lar value of retailer-issued cards excluding gas and telephone cards according to THE NILSON REPORT, issue 705, Dec. 1999, at 6. 2 CREDIT CARD NEWS, Credit Card Issuers' Guide 2001 Edition, July 15, 2000, at 3. © 2003 by Federal Legal Publications, Inc.

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