4 ms·

Seems like six of one, half dozen of the other. The merchants are the ones directly paying the transaction fee, but merchants only provide services to consumers

by laser 9y ago

Seems like six of one, half dozen of the other. The merchants are the ones directly paying the transaction fee, but merchants only provide services to consumers in the for-profit sector so long as they can make a profit. As a bit of an extreme to clearly demonstrate the principle, if a business is operating at a 3% profit margin on revenue before processing fees, and credit card providers demand a flat 3% + $0.30 fee per transaction, then the business becomes unprofitable, and loses $0.30 per transaction. Only one of three things can happen here. 1. The business eventually shuts down. 2. The business raises its prices. 3. The business cuts costs (lowers quality of product on average? Unless can take advantage of non-harmful cost-saving mechanisms, like informing consumers of cheaper transaction payment options, offering incentives for such, etc. which is what is being restricted anti-competitively). All three of these responses directly harm consumers. Case closed?

pravda 9y ago
Well, there is theory, and there is real world. In the real world, reductions in debit card fees (in the USA, via the Durbin Amendment) have not lead to lowered prices, just increased profits. [1] This explains why merchants care about processing fees. [1] From page 27 of https://www.law.gmu.edu/assets/files/publications/working_papers/1418.pdf https://www.law.gmu.edu/assets/files/publications/working_pa... "In the year following Durbin’s implementation, gasoline retailers realized more than $1 billion in savings from reduced interchange fees. But 'while this should mean savings of roughly 3 cents per gallon, no savings have been passed on to consumers.' This is particularly remarkable and instructive given that the retail gasoline industry is highly competitive, and at least one other study has demonstrated that gasoline excise taxes are almost instantly and fully passed through to consumers"
- argonaut 9y ago
  Your own report contradicts your argument all over the place. "There is little doubt that the Durbin Amendment had a major effect on consumers — and would-be bank customers — as issuers have, in various ways, passed on some of the costs of reduced interchange fee receipts, as discussed above" " retailers of smaller ticket items in particular have seen increased interchange fee costs as a result of the Durbin Amendment, and there is anecdotal evidence that these fees are being passed on to consumers" I didn't bother reading the entire report, either.

by laser 9y ago

pravda 9y ago

Well, there is theory, and there is real world. In the real world, reductions in debit card fees (in the USA, via the Durbin Amendment) have not lead to lowered prices, just increased profits. [1] This explains why merchants care about processing fees. [1] From page 27 of https://www.law.gmu.edu/assets/files/publications/working_papers/1418.pdf https://www.law.gmu.edu/assets/files/publications/working_pa... "In the year following Durbin’s implementation, gasoline retailers realized more than $1 billion in savings from reduced interchange fees. But 'while this should mean savings of roughly 3 cents per gallon, no savings have been passed on to consumers.' This is particularly remarkable and instructive given that the retail gasoline industry is highly competitive, and at least one other study has demonstrated that gasoline excise taxes are almost instantly and fully passed through to consumers"

argonaut 9y ago
Your own report contradicts your argument all over the place. "There is little doubt that the Durbin Amendment had a major effect on consumers — and would-be bank customers — as issuers have, in various ways, passed on some of the costs of reduced interchange fee receipts, as discussed above" " retailers of smaller ticket items in particular have seen increased interchange fee costs as a result of the Durbin Amendment, and there is anecdotal evidence that these fees are being passed on to consumers" I didn't bother reading the entire report, either.