Sep. 17, 2009 (PR Newswire) --
WASHINGTON, Sept. 17 /PRNewswire/ -- The Electronic Payments Coalition issued the following statement:
Today, the Electronic Payments Coalition released key evidence from several sources, demonstrating conclusively that consumers would be hurt by interchange regulation in the form of higher fees, fewer benefits, and zero savings at the cash register. Despite the misleading claims of giant retailers who want to shift this cost, merchants themselves have confirmed that they would not pass savings on to their customers.
Representatives of the U.S. government, international economic experts, the Reserve Bank of Australia, and merchants themselves have acknowledged that consumers would see no savings from any interchange regulation.
It's simple: merchants don't want to pay their fair share, and they want consumers to foot the bill. And that's not fair.
CRA International
However, "there is no evidence that losses to consumers have been offset by reductions in retail prices." (pp. 1, 4, 13, 58) Neither merchants nor the RBA has presented any empirical evidence showing the extent to which the benefits of interchange fee reductions were passed onto consumers. Rather, "[o]ne of the main effects of the RBA's interventions has been a redistribution of wealth in favour of merchants." (pp. 1, 4, 13, 20, 58) In fact, the CRA study showed that since 2003, when that regulation was implemented, cardholder fees have risen by 22% for standard cards, between 47%-77% for rewards cards, and cardholders now pay AU$480 more in credit card fees each year. The value of rewards also fell 23% during that period.
Robert Stillman, William Bishop, Kyla Malcolm, and Nicole Hildebrandt, "Regulatory intervention in the payment card industry by the Reserve Bank of Australia: Analysis of the Evidence" (28 April 2008), available at http://www.crai.com/ecp/assets/Regulatory_Intervention.pdf.
GAO Study
(p. 2) "Since Australia's regulators acted in 2003, total merchant discount fees paid by merchants have declined, but no conclusive evidence exists that lower interchange fees led merchants to reduce retail prices for goods; further, some costs for card users, such as annual and other fees, have increased. Few data exist on the impact of the actions taken in Mexico (beginning in 2004) and Israel (beginning in the late 1990s).
