We study the relationship between interchange fees and the number of per capita card transactions by means of a panel estimation covering a large number of countries worldwide, and assess the impact of the Interchange Fee Regulation, introduced in 2015, by comparing the dynamics of card usage in EU with those observed in a control group of countries using a difference-in-difference approach. This paper takes advantage of a newly assembled dataset covering almost 50 countries in the last decade.
We document a significant negative relationship between the level of interchange fees and payment cards usage; moreover, we find a strong and relevant one-off impact of the Interchange Fee Regulation immediately after its introduction and considerable propagation effect in the following years. Overall, we support the view that policy actions aiming at containing interchange fees can significantly contribute to the diffusion of electronic payments.
