Abstract
The Chinese credit card market has entered into a rapid development stage with the increase of residential income levels, advanced improvement of e–payment systems as well as policy perception on domestic demand expansion. There has been exponential growth in the credit card market. However, there are many disputes on commissions among the Point of Sale (POS) merchants regarding the extra charges arising from using the cards. Thus, the rationality of its market price structure is doubted. The paper adopts a price structure model for the credit card market under imperfect competition circumstances based on two–sided market theory. The paper produces an empirical analysis on the cross–network externality of the credit card market during the period of 1995–2013 and concludes that the reason why there are extra charges for using the cards is not the problem of price structure. Finally, possible suggestions are mentioned to improve the credit card markets and reduce financial risks.
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