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The Effects of Price Controls on Payment-Card Interchange Fees: A Review and Update

In March 2022, the International Center for Law and Economics (ICLE) published a study analyzing the effects of price controls on payment-card interchange fees. Examining 20 years of previous literature and data, the ICLE concludes that these regulations slowed innovation, decreased the efficacy of payment systems, and reduced benefits, particularly for lower-income consumers. The full study can be found below.
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Electronic Payments Coalition |

New Spelman College Study: Interchange Regulations Disproportionately Hurt Low-Income Families

Angelino Viceisza, Ph.D., recently released a study addressing the potential impacts of interchange regulation on the U.S. card industry, particularly payment and routing mandates. The stated purpose of the study is to “present potential implications of interchange regulations on lower interest cardholders, smaller merchants, and smaller banks.” Dr. Viceisza concludes that policymakers should refrain from extending interchange regulation to the U.S. credit card industry. Read the main takeaways from the study below.
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Electronic Payments Coalition |

EPC Explainer Video: Credit Routing Mandates and Why They Hurt Consumers

What is credit routing, and how does it work? In this explainer video, EPC breaks down the process that allows consumers to receive both the rewards perks and the fraud protection that they value in credit card transactions. The video also underscores the dangers of proposed credit routing mandates, which could reduce consumers’ credit card security and limit their ability to earn rewards. Click on the video to learn more.
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Electronic Payments Coalition |

Coalition Letter Opposing Regulation on Debit Interchange

On February 1, 2022, several banking organizations, including a number of EPC members, penned a letter to the Federal Reserve. The letter was in response to the Fed’s recent proposal to reopen Regulation II, which covers debit card routing and interchange. The authors urge the Federal Reserve to resist increasing the Durbin Amendment’s regulatory burden, concluding that the amendment should be repealed. Read the full letter below.
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Electronic Payments Coalition |

Credit Cards and the Reverse Robin Hood Fallacy: A Primer

The International Center for Law and Economics (ICLE) recently released a study addressing the “Reverse Robin Hood” fallacy, a belief which holds that credit card rewards function as a transfer of wealth from the poor to the rich. The study highlights the faulty logic present in this line of reasoning, arguing the evidence suggests that the Reverse Robin Hood hypothesis, “should be rejected and that action to address it could be counterproductive.” Read the key takeaways from the study below.
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Electronic Payments Coalition |

The Value of Rewards: October 2021

Today, the EPC released its report on the value of electronic payments rewards programs. The report illustrates the numerous benefits that credit and debit card rewards offer retailers and consumers of all income levels while rebutting the most common criticisms of rewards cards. It concludes: “the data clearly demonstrate that interchange fees that merchants pay are easily outweighed by the value they receive in return.” The full report is included below.
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ICLE |

Credit Cards and the Reverse Robin Hood Fallacy: Do Credit Card Rewards Really Steal from the Poor and Give to the Rich?

Recently, the International Center for Law and Economics (ICLE) published a study analyzing the credit card market and the “Reverse Robin Hood” fallacy—the erroneous belief that credit card rewards programs steal from the poor to benefit the rich. The study authors debunk this idea, concluding that addressing the concern by capping credit card interchange would “create far more risk of harm than good.” The full study can be found below.
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Electronic Payments Coalition |

Myth vs. Fact: Setting the Record Straight on Credit and Debit Routing

On October 19, 2021, Payments Dive published an op-ed by Doug Kantor advocating increased government regulation in the electronic payments industry, entitled, “Retailer groups urge credit swipe routing changes.” The piece makes several faulty claims about interchange as well as credit and debit routing, which are consistently repeated across a multitude of media outlets and groups in opposition to the EPC. These claims have been addressed below.
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