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How Capping Interchange Fees Will Hurt Consumers, Charities, Community Banks, and Credit Unions
In recent years, the use of credit and debit cards to purchase goods and services has surged in the United States, and American consumers pay with “plastic” now more than ever before. The growth in popularity of payment cards has benefited greatly both consumers and retailers. Innovations in electronic payment networks have improved the efficiency of business transactions, enabled seamless and secure digital commerce, and provided consumers with valuable tools for saving money and managing personal finances.
Despite this success story, both houses of Congress are now considering legislation that would inject government into a central role in the setting of fees and rules for payment cards…If Congress wants to advance consumer interests, it should reject proposals to regulate interchange fees and instead focus on reforming laws that distort natural market arrangements in the payment card market.
At a time when the U.S. economy is recovering from one of the worst recessions in decades, for government to intervene in this well-functioning market would have serious unintended negative consequences for consumer welfare.
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