The overlapping network of the payment cards market: The case of Mexico

The increased volume of digitally performed payment transactions has contributed to the efficiency on funds allocation in terms of speed and cost reductions, as well as it constitutes an ecological friendly alternative to cash payments. This paper analyses the use and adoption of payment cards in the context of the industrial organization of the market in Mexico. In particular, there are two Automated Clearing Houses (ACH) that process significant number of transactions split between the two of them. We argue that this arrangement creates an important overlap on the scope that ACH can reach, increases the cost of processing of payment transactions and de facto instead of favoring the use of cards, operates against it. We propose indicators such as network density, connectivity and overlapping to measure the sharing activities from network theory perspective with 5 years data of bilateral transactions. In an incipient market, results throw empirical evidence that contributes to the discussion of how many ACH are required to stimulate the use and adoption of payment cards.