Here are a few points that Ms. Palmer fails to report:
1) The Reserve Bank of Australia completely rebutted the claims made in the Master Card study. In a 2008 preliminary review of the reforms, the Reserve Bank of Australia (RBA) concluded that despite difficulties of measurement, cost savings from interchange fee reforms “have been passed on to consumers in the form of lower prices for goods and services than would have otherwise been the case. Despite difficulties of measurement, "the Board’s judgment remains that the bulk of these savings have been, or will eventually be, passed through into savings to consumers . . . The Bank’s estimate is that over the past year, these cost savings have amounted to around $1.1 billion.'" Here's the link to the citation.
2) The fees don’t pay for convenience. Many times the same card gets used in the same way to access the same money from the same account and the bank pays interchange – it’s called an ATM transaction. There is no reason for interchange on debit (there is none on checks and they are a more expensive convenience for banks to provide). Ron Shevlin, who is quoted in the article, is simply wrong on that.
3) The Redbox example is completely wrong. Its fee didn't go up because debit fees went down. That happened because the Fed didn’t follow the law and let Visa and MasterCard raise fees on transactions under $15 – the kind RedBox gets. That shows that high swipe fees are paid by consumers.
4) The EPC "data" is not taken from any legitimate study – or any study at all. It is bogus, based on nothing. They just assumed that any savings weren’t factored into pricing. They did no other analysis on the gas prices they refer to at all. Retailers always pass along savings. They are competitive with each other, unlike the credit card companies that, along with the banks, price fix the swipe fee.
5) The Federal Reserve report found that the percentage share of total transactions for both PIN and signature stayed almost the same. In other words, merchants aren’t discriminating against small bank cards even though they have higher interchange. The merchants and retailers said they would never do this, and this is proof that the retail community has kept its word.
Karen Hinton
Merchants Payments Coalition
Karen Hintonof DC5:48PM May 11, 2012
Congress again has implemented price controls which history has proven to ultimately fail in the US. Instead of allowing the free market to charge merchants for services they freely demand, our elected representatives chose a calculation formula that is unrealistic.
If Congress required the Post Office to follow the same formula, we would be paying $6 to mail a letter. Instead, the PO is allowed to lose $5 billion each year which the TAXPAYER subsidizes. Here the merchants receive more income and the consumer sees none of it passed on. Congress should stop involving themselves in the private sector especially since they do not understand the business. After all, do you really think government can do things better than the private sector?
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Karen Hinton of DC 5:48PM May 11, 2012
Rick of IN 1:58PM May 03, 2012