a long-term goal of the federal reserve is to facilitate a transition from a payment system reline on paper check and cash to more efficient and convenient electronics based technologies. debit cards have helped speed that transition. staff have recognized the importance of establishing an environment that will be conducive to continued innovation in the payment system in the years ahead, one receptive to the adoption of promising new technologies. they further sought to establish a standard that will be transparent and reduce the burden on supervision. the legislation directing this rule making was motivated in part by the fact that interchange fees in the united states have increased substantially over time. where as in those countries where interchange fees have historically been low or have been limited by government intervention, the use of debit cards has remained robust this escalation may well reflect a market failure. economic theorys suggest, however that the determination of prices in two sided markets like the debit card network are complex, regarding important network and

a long-term goal of the federal reserve is to facilitate a transition from a payment system reline onenient electronics based technologies. debit cards have helped speed that transition. staff have recognized the importance of establishing an environment that will be conducive to continued innovation in the payment system in the years ahead, one receptive to the adoption of promising new technologies. they further sought to establish a standard that will be transparent and reduce the burden on supervision. the legislation directing this rule making was motivated in part by the fact that interchange fees in the united states have increased substantially over time. where as in those countries where interchange fees have historically been low or have been limited by government intervention, the use of debit cards has remained robust this escalation may well reflect a market failure. economic theorys suggest, however that the determination of prices in two sided markets like the debit card network are complex, regarding important network and usage extern externalalities. the literature re