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Retailers Versus Credit Cards
Retailers benefit mightily from consumer use of credit, debit and gift cards. Now merchants want even greater benefits. While the convenience provided by payment cards has helped spur retail sales on items large and small, the increased sales means that the total fees received by card system companies has increased even though the rate paid remains flat. An official with the National Retail Foundation stated that the interchange fees paid "has tripled since 2001, mainly due to increased credit and signature debit-card use."

What happens when a massive industry has a dispute with another big industry? They go to Washington and ask politicians to help them out. In this case, the retail industry is advocating proposed legislation that would "enable merchants to collectively negotiate fees.... If an agreement is not reached, a panel of judges from the Federal Trade Commission and the Department of Justice Antitrust Division would oversee binding arbitration."

U.S. PIRG and the Service Employees International Union have come out on the side of the retailers. A PIRG official said that when Australia mandated lower interchange fees, it "led to reduction of card costs, greater innovation, and greater competition leading to lower interest rates." Meanwhile MasterCard states that "there's no evidence Australian merchants lowered prices" as a result of fee reductions.

Why PIRG and the union think that retailers would share their lobbying spoils with consumers is unclear. A good rule of thumb is that when government steps in to help big business, consumers lose.

See news article

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