In The News

Recent articles about the electronic payments industry and organized efforts aimed at price controls and other government regulation of the free-market electronic payments system.

National Review

"An antitrust waiver for the merchants would amount to a congressional attempt to rig a deal in the merchants’ favor. If it succeeded, it too would be likely to yield increased fees to customers. And, to repeat, the merchants are not being victimized. They just want a better deal. Which is fine: but they should not get one through an act of Congress."

"Credit Unworthy," (July 9, 2008)
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THE WASHINGTON TIMES

"American consumers will be harmed by the Credit Card Fair Fee Act because it is seeded in price controls and price controls cause shortages, reduce competition and innovation, and consequently force consumers to dip further into their wallets."

Eric Grover, "Conyers' Wallets" (May 27, 2008)
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THE BOSTON GLOBE

"It would be hard to think of a more unqualified example of a free-market success [than the electronic payments system], one that daily proves its value anew to the millions of consumers and merchants who willingly use cards for payment."

Jeff Jacoby, "Leave the 'Plastic' Alone" (April 30, 2008)
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THE WALL STREET JOURNAL

"The Conyers-Cannon bill requires that . . . if the parties can't agree, a three-person panel of "electronic payment judges" will "determine rates and terms" which shall be binding. That sounds like a price-control regime."

"Credit Card Wars" (March 29, 2008)
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THE NEW YORK SUN

"Crippling Visa and MasterCard through regulation would decrease consumer choice and buying power, and ultimately hurt the merchants who are calling for it."

Philip Kerpen, policy director for Americans for Prosperity, "Crippling Credit Cards" (March 26, 2008)
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WASHINGTON TIMES

"The many credit card companies, their bank clients and the millions of merchants who accept the cards have freely negotiated fees for decades, much as businesses negotiate prices with each other for goods and services."

Richard W. Rahn, "Really Bad Ideas" (March 20, 2008)
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AMERICAN BANKER

"The case for regulating card acceptance fees has never been weaker. . . . The payment market has never been more competitive, and network competition, differentiation, and innovation are increasing."

Eric Grover, "Viewpoint: Let Market, Not D.C., Set Interchange Rates" (March 14, 2008)

THE DESERET MORNING NEWS (Utah)

"Any attempt to call the fees a so-called hidden tax would be similar to trying to misrepresent businesses' rent or salaries for employees as a 'hidden tax' on their customers, the coalition said."

"Credit-Card Fight: Measure Would Allow Merchants to Negotiate Fees, but Consumers May Not See the Savings" (March 12, 2008)
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The Wall Street Journal Europe

“By ignoring that wide choice already exists, [European Commissioner Neelie] Kroes is able to slap down these ‘inflated’ fees in the name of consumer protection without explaining – or perhaps fully understanding – how card users might be harmed with the elimination of the fee.”

“Brussels Prices” (Editorial, January 11, 2008)
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The Wall Street Journal Europe

“Reducing these fees might eliminate undue profits, if there are any, but the resource costs are real and need to be covered. Consumers would then be forced to pick up some of the cost burden from retailers.”

Leo Van Hove, Associate Professor of Economics, Vrije Universiteit Brussel, “Regulating in the Dark” (January 3, 2008)
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The Wall Street Journal (Also appeared in WSJ Asia and WSJ Europe on January 2, 2008)

“The fees . . . encourage merchants to accept cards. . . . By asking merchants to pay a fair price for the significant benefits they receive, interchange keeps costs low for cardholders.”

Joshua Peirez (MasterCard Worldwide), “EU Killing of Interchange Fees Won’t Help Customers” (Letter to the Editor, December 28, 2007)
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Financial Times (London)

“I doubt whether retailers’ motives for banning interchange are wholly altruistic. In Australia, where interchange fees have been regulated since 2004, there are no signs that retailers are passing on the fee reduction to consumers. Indeed, the cost of credit has increased as banks have sought other ways to recoup the costs of running a payment system.”

Merlin Stone, Professor of Marketing, Bristol Business School, “Retailers’ Motives on Interchange Are Not Altruistic” (Letter to the Editor, December 27, 2007)
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Financial Times (Asia)

“In the U.S. . . . a handful of retailers are trying to get a free lunch on the backs of banks and American consumers. Just as a group of European merchants did, American merchants want their government to play the accomplice as they shift their card acceptance cost to the cardholders and increase their coffers.”

Camden Fine, President and Chief Executive, Independent Community Bankers of America, “A Price Cap on Interchange Has the Stamp of a Greek Tragedy” (Letter to the Editor, December 27, 2007)
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The Press Register (Mobile, AL)

“If these merchants win, consumers are likely to be charged a checkout fee every time they use plastic at the checkout counter. . . . Merchants would effectively reach into every consumer’s wallet and decide which credit cards to accept and which they won’t, leaving consumers embarrassed and confused at the checkout counter.”

Dan Bailey, “Reject Checkout Fees” (November 20, 2007)
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Southtown Star (IL)

“A study by RPMG Research indicates that companies save approximately $23 billion annually by shifting from paper to electronic payments. . . . Consumers should not fall for the ‘hidden price’ argument.”

Peter Madigan, Executive Director, Electronic Payments Coalition, “Letter to the Editor” (August 26, 2007)
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NewsNet5 (Cleveland, OH)

“It’s a growing trend: restaurants and convenience stores set the [credit card] minimum to avoid processing fees on small purchases. . . . While it’s not illegal, [customer Dan] Lindemann feels it’s not right.
‘Two dollars is not that big a deal. It’s the principle. If they’re doing it to me, they’re doing it to other people,’ he said.”

John Matarese reporting, “More Merchants Set Credit Card Minimums for Purchases” (July 25, 2007)
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The Bend Bulletin (OR)

“For [restaurant owner Dave] Hatfield, embracing noncash payments was an easy switch for his patrons and a huge convenience for him.
‘I got tired of dealing with theft and paying all the waiters to spend an hour counting all the cash, then I would count it all and then I’d drive a good 10 miles to the bank,’ Hatfield said. ‘Now, I save a good 45 minutes to an hour per day. At the end of the day, I just push a button and everything goes through and life is good.’”

Anna Sowa, “Cash? No Thanks, Say Restaurants” (July 24, 2007)
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Digital Transactions

“Interchange set by the networks helps small banks. . . . . [John] Buhrmaster . . . is the fourth-generation Buhrmaster to head 1st National. “I can tell you with confidence, if I didn’t have a card network like Visa or MasterCard standing in for me to negotiate interchange rates against the mega-banks with national footprints, I—and maybe my father before me who served as president—would simply not have been able to compete for as long as we have.”

“A House Antitrust Panel Becomes the Latest Interchange Battlefield” (July 19, 2007)
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Credit Union Times

“In Australia, interchange is either subject to price controlled or allowed to be passed on to the consumer by the retailer. Neither approach, Visa has argued, has cut costs to the Australian consumer. [Rosetta Jones, vice president with Visa USA, said] ‘A bad policy decision in Australia clearly led to consumer harm, which we hope to avoid here in the U.S.’”

David Morrison, “Visa USA Pointing to Australian Example on Interchange” (July 19, 2007)
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Green Sheet

“For the first time, consumers prefer debit cards to any other type of payment for POS purchases, according to the PaymentDynamics 2007 Preferred Payments Study. When adding payment options, pricing is the primary driver, followed by rewards programs.”

“Industry Update: Consumers Prefer Debit to Credit” (May 25, 2007)
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Republican-American (Waterbury, CT)

“These decisions have allowed me to reach consumers and sell my merchandise quickly, efficiently, and just about anywhere in the world. Credit lenders provide security in these virtual exchanges, guarantee payments to the seller and protect consumers against fraud. No one likes paying fees, but why should we expect something as advantageous as credit-card service to be free?”

Richard Destadio, “Let Markets Dictate Fees on Credit Cards” (Editorial, February 21, 2007)
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The Associated Press

“Some checks even are being converted into electronic payments by merchants, who prefer electronic transfers to handling paper checks. Converting checks to electronic payments allows merchants to get paid more quickly, and it might help reduce the number of insufficient-funds checks businesses have to deal with.”

“Checks Hang On, but Merchants Help Electronic Payments Gain Favor” (February 18, 2007)
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American Banker

“By shifting from cash to plastic, [Cindy Ullrich, senior vice president of Harris BankCorp in Chicago] said, businesses can ‘reduce the petty cash that they have on hand’ for various expenses, which is always susceptible to theft. And debit cards are more convenient than checks, Ms. Ullrich said. ‘You don’t have to show an ID when you use debit. At the end of the day, it saves them time.”

David Breitkopf, “Debit Cards Getting Bigger Following in Small Business” (February 9, 2007)
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The Forum (North Dakota)

“As people increasingly use debit and credit cards instead of traditional checks, more and more businesses are refusing to accept any paper other than cash. . . . ‘Some people get mad; they feel maybe insulted. But it’s just a business decision that had to be taken,’ said [restaurant owner Juan] Mondragon, who estimates they were losing $100 to $150 a month because of bad checks.”

Dave Olson, “Check Snub” (February 7, 2007)
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The Boston Globe

“Edward Sampson and his wife funnel their donations to St. Patrick Parish in Lawrence through an electronic payment service, the fast-growing standard for worldly transactions that’s finally reaching the pews. Sampson and other users praise the convenience and say the system helps them plan their contributions over the long-term—which tends to increase their giving, compared with traditional weekly contributions.”

Ross Kerber, “Bless You, We Take Visa” (January 29, 2007)
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TheStreet.com

“Why keep all of us waiting, when your ATM card with the Visa or MasterCard logo is an instant debit card that you could easily use at the supermarket, or dozens of other places? . . . Everyone in line behind you at every one of those stores would bless you for using this responsible, modern convenience.”

Terry Savage, “Use That Debit Card!” (January 21, 2007)
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Tulsa World

“’Credit cards are intended as a fast form of payment, and the credit card companies want to encourage their frequent use,’ Carol Hively, a spokeswoman for Walgreen Co., stated in an email. ‘Walgreen’s also emphasizes fast service, so we like being able to speed up the transaction.’”

Laurie Winslow, “Credit Card Use Faster, Easier” (January 21, 2007)
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Reuters

“The Federal Reserve Banks on Tuesday said they plan another round of studies on the shift of retail payments away from traditional paper checks to electronic transactions to help financial institutions better invest in future payments technology. . . . The previous studies captured the dramatic shift in payments away from paper-based checks and toward electronic payments.”

“Fed Banks to Study Shift to Electronic Payments” (January 16, 2007)
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