Refer To The Artcle merchants Shred Costs Of Plastic Enclosed Article

Refer To The Artcle merchants Shred Costs Of Plastic Enclosed Article Refer To The Artcle merchants Shred Costs Of Plastic Enclosed – Article Example Merchants shred costs of plastic† Interchange fees are those bank charges for the processing of transactions using debit and credit cards which are deducted from the payments to the merchant in the sale side of the transaction. A simplified depiction of the interchange transaction mechanics is shown in the diagram below. There is sufficient justification for the charging of fees in terms of services extended by these banks, in terms of the processing of transaction information for the merchant, and the setting up of the necessary systems in terms of hardware, people, and applications to support these processes (Pacheco this allows consumers to hold credit cards with no added cost to them, and stave off intentions to dispose of them entirely. Another would be to set up a facility with a lower capitalization, since issuers with assets below $10 billion are exempted from the interchange reduction scheme (Grover, 2010). Finally, another market strategy would be to collaborate with merchants to create card products that allow for delayed or instalment payments as well as rebates and rewards systems for cardholders to be persuaded to transact because they acquire added value from their card transactions.Bibliography:Grover, E. (2010) â€Å"Interchange Plan Is Anti-Competitive.† American Banker, 5/18/2010, 175(76):8Hayashi, F. & Weiner, S. E. (2006) â€Å"Interchange Fees in Australia, the UK, and the United States: Matching Theory and Practice.†. Economic Review (01612387), 3rd Quarter, 91(3):75-112Lyon, J.M. (2006) â€Å"The Interchange Fee Debate: Issues and Economics.† The Region, June. The Federal Reserve Bank of Minneapolis.Pacheco, B. & Sullivan, R. (2006) â€Å"Interchange Fees in Credit and Debit Card Markets: What Role for Public Authorities?† Economic Review (01612387), 1st Quarter, 91(1):87-113