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Interchange fees for bank ATM networks

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  • S. H. Gow
  • L. C. Thomas

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. © 1998 John Wiley & Sons, Inc. Naval Research Logistics 45: 407–417, 1998

Suggested Citation

  • S. H. Gow & L. C. Thomas, 1998. "Interchange fees for bank ATM networks," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(4), pages 407-417, June.
    • Handle: RePEc:wly:navres:v:45:y:1998:i:4:p:407-417
    DOI: 10.1002/(SICI)1520-6750(199806)45:43.0.CO;2-9
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    References listed on IDEAS

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    1. S.C. Littlechild & G.F. Thompson, 1977. "Aircraft Landing Fees: A Game Theory Approach," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 186-204, Spring.
    2. S. C. Littlechild & G. Owen, 1973. "A Simple Expression for the Shapley Value in a Special Case," Management Science, INFORMS, vol. 20(3), pages 370-372, November.
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    Cited by:

    1. Nguyen, Tri-Dung, 2024. "Game of banks - biform game theoretical framework for ATM network cost sharing," European Journal of Operational Research, Elsevier, vol. 316(3), pages 1158-1178.
    2. Hangfei Guo & Mingming Leng & Yulan Wang, 2012. "Interchange fee rate, merchant discount rate, and retail price in a credit card network: A game‐theoretic analysis," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(7), pages 525-551, October.
    3. M.A. Hinojosa & A.M. Mármol & L.C. Thomas, 2005. "A multi‐objective model for bank ATM networks," Naval Research Logistics (NRL), John Wiley & Sons, vol. 52(2), pages 165-177, March.
    4. Mingming Leng & Mahmut Parlar, 2010. "Analytic solution for the nucleolus of a three‐player cooperative game," Naval Research Logistics (NRL), John Wiley & Sons, vol. 57(7), pages 667-672, October.
    5. Bjorndal, E. & Hamers, H.J.M. & Koster, M.A.L., 2003. "Cost Allocation in a Bank ATM Network," Other publications TiSEM b81bf5f2-084f-4552-9094-a, Tilburg University, School of Economics and Management.

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