Legal Seminar, Denver, CO

Challenges of Two‐Sided Markets • Consumer side:  why use an electronic payment  (instead of cash or another payment avenue)? – Consumer protection measures – Liquidity and access to funds (or credit) – Rewards and economic incentives • Economists tell us that consumer demand  elasticity may be greater than that of merchants  (due to greater flexibility) – That means consumers are likely in the driver seat.  Challenges of Two‐Sided Markets • Merchants. – Enhanced transaction volumes – Outsourced credit decisions – Payment security (vs. credit as benchmark) – Costs of participation must not outweigh benefits • If Merchants don’t adopt, consumers can’t use; if  consumers don’t use, adoption is moot • But Merchants may have less flexibility to not  adopt in face of consumer demand/competitive  markets