McAndrews examines the arguments of Carlton and Frankel concerning two aspects of the market for credit cards: interchange fees and duality. Interchange fees involve the payments from banks that issued cards to the banks that received the deposits of the merchants that accepted the credit cards as means of payments. The issuing banks pay a fraction of the amounts purchased with the cards to the acquiring banks. The fraction of the purchase price withheld by the issuing bank is called the interchange fee. Carlton and Frankel examine the potential for mem¬bers of credit card systems to extract monopoly profits from merchants through interchange fees. McAndrews challenges the argument that the existence of interchange fees necessarily reflects anticompetitive practices by members of a payment system.

Commentary on "Antitrust and Payment Technologies" by Dennis W. Carlton and Alan S. Frankel.