Economic Issues Associated with Access to Electronic Payments Systems

This paper provides an economic analysis of the competition issues arising from access to the electronic payments system. Such concerns were raised in the Wallis Report and in particular in an ACCC Draft Determination on the Australian Payments Clearing Association (1997). We draw on existing US economic literature to explain the theory of network effects, which has been used there for analysing payment systems (and other networks, especially in information technology markets). Three levels of analysis of access to the electronic payments system are distinguished - access to settlement, voluntary industry associations, and payment system facilities. Throughout the article the ACCC Draft Determination is discussed and a critique provided