Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, July 20, 2007

Retail Payments and Card Use in the Netherlands: Pricing, Scale, and Antitrust

Posted by D. Daniel Sokol

Payment systems is a very interesting antitrust topic and one that I am spending more time thinking about as I plan to teach payment systems in the spring semester.  The excellent Competition Policy International had a special issue devoted to antitrust issues in payment systems.  One of the articles, by Dutchman Wilko Bolt, focuses on antitrust issues in payment systems in the Netherlands, called Retail Payments and Card Use in the Netherlands: Pricing, Scale, and Antitrust.

ABSTRACT: Efficient payment systems are essential components of well-functioning economies and financial markets, facilitating the exchange of goods, services, and assets. The speed and ease with which payments can be processed and executed will in general affect economic activities, output, and price levels. Therefore it is important that payment systems satisfy some basic principles of economic efficiency. The payment landscape is changing rapidly, with the fast growth of credit and debit card payment systems in many developed economies as perhaps one of the most striking examples. Data from a 2004 paper by Zinman show that in the United States alone, in 2002, consumers used their debit and credit cards in 33.4 billion transactions to charge around USD 2.3 trillion in total. Furthermore, data from Krueger's 2001 paper and the Bank for International Settlements (BIS) illustrate that in ten industrial countries the use of debit and credit cards rose from over nine billion transactions in 1987 to about 51 billion transactions in 2002. In particular, in the Netherlands, the enormous upswing in the usage of debit cards has been the main driver for the rapid developments in non-cash payments. Debit card payments in the Netherlands exceeded EUR 56 billion in 2004 (more than 12 percent of GDP) with a volume of around 1.25 billion debit card transactions (50 times higher than in 1990), and they are still growing rapidly.

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