1. "When Senator Dick Durbin (D-Illinois) proposed his rule to limit the debit card interchange fee on merchants, his intention was probably to cut the operations costs of merchants, who can then pass these savings on to customers.
2. However, since this piece of Dodd-Frank financial reform -- which capped merchant debit card fees at 21 cents per transaction and would cost banks over $6 billion annually -- came into effect, it’s had many unintended consequences.
3. [Banks] announced and then quickly scuttled plans to charge customers a fee for their debit card usage after a huge customer uproar.
4. Two months into the “Durbin Amendment” era, the Wall Street Journal is reporting that both merchants and consumers actually have to pay higher prices than before.
"Many business owners who sell low-priced goods like coffee and candy bars now are paying higher rates—not lower—when their customers use debit cards for transactions that are less than roughly $10.
That is because credit-card companies used to give merchants discounts on debit-card fees they pay on small transactions. But the Dodd-Frank Act placed an overall cap on the fees, and the banking industry has responded by eliminating the discounts."
5.Both Visa (V) and Mastercard (MA) have terminated the small-transaction discount. According to Chris McWilton, president of US markets for Mastercard, his company could not afford to continue offering the discounts with the cap in effect because the old interchange fee rates was what subsidized the discounts for small-ticket items.
6. Merchants are dealing with this consequence of the Durbin amendment by either upping their prices, urging customers to pay in cash instead, or eliminating card transactions.
7. [Companies] told the Journal that it will increase prices by 20% to $1.20 a movie starting in January because of higher costs, attributed in part to debit card fees.
Debit Card Fee Cap Might Not Save You Money After All | The Daily Feed | Minyanville.com
8. The Über-liberal 'Mother Jones' has this view:
"If card companies were really interested in a free market, they'd remove the clause in their standard contract that prevents merchants from charging higher prices on credit and debit card transactions. Merchants would then be free to pass along swipe fees to their customers or not as they saw fit, and the free market would determine the outcome. But they've resolutely refused to do that, and since Visa and MasterCard are an effective monopoly, merchants have nowhere else to go."
Crocodile Tears From the Credit Card Industry | Mother Jones
So...'Mother Jones would like to see different prices on each item....cash, credit, debit....
I don't subscribe to their mag, but I wonder if they have different rates depending on how subscribers pay?
What can we learn from the latest episode of government turing wine into water?
a. Exactly as Dr. Thomas Sowell has warned in his tome "Applied Economics," "politicians do not think beyond Stage One because they will be praised (and elected) for the short term benefits but will not be held accountable much later when the long term consequences appear. Pay special attention to the phrase "unintended consequences" above.
b. Proposals that seem too good to be true...usually are.
c. Free-market competition is usually what results in lower prices and better service for the customer, as they voluntarily give their money....contrary to the manner in which government works.
d. It would be wise to apply this tale of woe to the absurd 'social justice- income equality' promises of the very same government folks.
...remember this when you go to vote.
2. However, since this piece of Dodd-Frank financial reform -- which capped merchant debit card fees at 21 cents per transaction and would cost banks over $6 billion annually -- came into effect, it’s had many unintended consequences.
3. [Banks] announced and then quickly scuttled plans to charge customers a fee for their debit card usage after a huge customer uproar.
4. Two months into the “Durbin Amendment” era, the Wall Street Journal is reporting that both merchants and consumers actually have to pay higher prices than before.
"Many business owners who sell low-priced goods like coffee and candy bars now are paying higher rates—not lower—when their customers use debit cards for transactions that are less than roughly $10.
That is because credit-card companies used to give merchants discounts on debit-card fees they pay on small transactions. But the Dodd-Frank Act placed an overall cap on the fees, and the banking industry has responded by eliminating the discounts."
5.Both Visa (V) and Mastercard (MA) have terminated the small-transaction discount. According to Chris McWilton, president of US markets for Mastercard, his company could not afford to continue offering the discounts with the cap in effect because the old interchange fee rates was what subsidized the discounts for small-ticket items.
6. Merchants are dealing with this consequence of the Durbin amendment by either upping their prices, urging customers to pay in cash instead, or eliminating card transactions.
7. [Companies] told the Journal that it will increase prices by 20% to $1.20 a movie starting in January because of higher costs, attributed in part to debit card fees.
Debit Card Fee Cap Might Not Save You Money After All | The Daily Feed | Minyanville.com
8. The Über-liberal 'Mother Jones' has this view:
"If card companies were really interested in a free market, they'd remove the clause in their standard contract that prevents merchants from charging higher prices on credit and debit card transactions. Merchants would then be free to pass along swipe fees to their customers or not as they saw fit, and the free market would determine the outcome. But they've resolutely refused to do that, and since Visa and MasterCard are an effective monopoly, merchants have nowhere else to go."
Crocodile Tears From the Credit Card Industry | Mother Jones
So...'Mother Jones would like to see different prices on each item....cash, credit, debit....
I don't subscribe to their mag, but I wonder if they have different rates depending on how subscribers pay?
What can we learn from the latest episode of government turing wine into water?
a. Exactly as Dr. Thomas Sowell has warned in his tome "Applied Economics," "politicians do not think beyond Stage One because they will be praised (and elected) for the short term benefits but will not be held accountable much later when the long term consequences appear. Pay special attention to the phrase "unintended consequences" above.
b. Proposals that seem too good to be true...usually are.
c. Free-market competition is usually what results in lower prices and better service for the customer, as they voluntarily give their money....contrary to the manner in which government works.
d. It would be wise to apply this tale of woe to the absurd 'social justice- income equality' promises of the very same government folks.
...remember this when you go to vote.
Last edited:
