Comment by alberth
2 years ago
> The money extracted by the credit card companies and Visa causes merchants to raise prices for everyone regardless of whether they have a rewards card or use a credit card at all.
Case studies indicate otherwise.
Dodd-Frank Act postulated what you stated, that higher fees result in higher prices for consumers ... and if you lowered the fees for the merchants, merchants would lower their prices (to pass along that savings back to the consumers).
But studies have shown otherwise, and merchants did not lower fees.
https://www.cutimes.com/2015/09/03/durbin-failing-to-lower-m...
Claiming that merchant fees result in higher prices is different from claiming that reducing merchant fees would directly, immediately, or measurably lower prices. Isn't a plausible explanation that companies are hesitant to lower prices for any reason?
Let's consider the opposite scenario, if Visa raises their fees do merchants keep prices where they are? I suspect not.
Also true for Australia! When they regulated interchange, merchants did not pass the savings on to consumers.[1]
[1] https://laweconcenter.org/resources/the-effects-of-price-con...
That think tank is funded[1] by the anti-regulation Charles Koch Institute and the article should be read with that in mind.
[1]: https://www.influencewatch.org/non-profit/international-poli...
That may be true. But do you in your heart of hearts think that companies are going to pass those savings on to consumers?
> Two thirds of the merchants surveyed reported no change or didn't know the change in their debit costs post-regulation. One fourth actually reported an increase in debit costs