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17 July 2009 2:00 PM
Plastic
Kevin Drum wants to forbid credit card companies from charging merchants a fee on every transaction:
...let's kill two birds with one stone and just abolish interchange fees altogether. Card companies would then be forced to charge higher annual fees to credit card users -- fees that (a) would fall solely on the people actually using credit cards and (b) would make it obvious just how much credit cards actually cost. That strikes me as an excellent idea. Credit cards aren't a free lunch, and there's no reason that consumers should be fooled into thinking they are.And if that means consumers end up using credit cards less -- well, what's wrong with that? It's the free market in action.
Comments (4)
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I wish people would quit thinking of more ways for government to force their wishes on business, and us, and spend more time thinking of ways to make government less intrusive.
Because it's great that a monopoly business is allowed to force costs on businesses that are not really its customers and then forbid them from passing those costs onto the actual customers! Since one company controls something like 80% of the credit card market, I'd say it's fairly ripe for regulation.
All this would take is for Congress to pass a law preventing the practice of forbidding merchants from passing the fee onto credit card users. Once using a credit card means an immediate 2% fee on top of the purchase, the issuers would likely reduce or rescind the fees on their own.
No, I think that the fees are justified. There are costs related to doing business and they will transfer those costs to interest rates.
What is unfair is that merchants are prevented from giving the appropriate discount for using cash!
Um, banning fees would not be the free market in action. That's what's wrong with this.