Interchange fees for bank ATM networks

Interchange fees for bank ATM networks

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Article ID: iaor1999225
Country: United States
Volume: 45
Issue: 4
Start Page Number: 407
End Page Number: 417
Publication Date: Jun 1998
Journal: Naval Research Logistics
Authors: ,
Keywords: game theory
Abstract:

Banks have found it advantageous to connect their Automated Teller Machines (ATMs) in networks so that customers of one bank may use the ATMs of any bank in the network. When this occurs, an interchange fee is paid by the customer's bank to the one that owns the ATM. These have been set by historic interbank negotiation. The paper investigates how a model based on n-player game theory concepts of Shapley value and nucleolus could be used as an alternative way of setting such fees.

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