Retailers have invested in electronic payments systems and choose to offer the option because consumers prefer it and because it increases sales. Now some retailers want all the benefits without paying for them. What they really want are price controls. But many respected experts across the spectrum agree: price controls will lead to higher consumer costs and fewer choices for cardholders.

“There is a consensus among economists that, as a matter of theory, it is not possible to arrive, except by happenstance, at the socially optimal interchange fee through any regulatory system.”

David Evans, University College London, and Richard Schmalensee,
MIT Sloan School of Management; May 2005

 

“This accelerating focus on cost-based regulation of interchange fees is also quite perplexing in view of the common recognition among economists and policy makers that heavy-handed price regulation is rarely desirable and risks unintended consequences (such as…shifting of cost burdens to consumers) that can distort markets.”

Margaret E. Guerin-Calvert and Janusz A. Ordover, New York University; December 2005

 

“We do not believe, however, there is any convincing evidence that price regulation benefits consumers.”

Robert E. Litan, Brookings Institution, and Alex J. Pollock,
American Enterprise Institute; February 2006

 

“The Reserve Bank had hoped the savings made by stores would be passed on to consumers through lower prices for goods and services. But Dr. Lowe admitted there was no evidence that these savings had translated to lower prices.”

“Card Sting,” Consumer Affairs, May 16, 2006
(Reference to Dr. Philip Lowe, Reserve Bank of Australia)

 

“The current system of interchange fees is a necessary part of an industry that provides enormous benefits to consumers.” “It is hard to imagine how intervention in the form of price regulation could possibly improve matters.”

The Honorable Timothy J. Muris, Former Chairman, Federal Trade Commission; July 2006

 

”Direct systems of price regulation create as many distortions as they remove.”

Richard Epstein, Columbia Business Law Review, 2005

 

“…too little is known at this juncture either to settle the argument definitively or to justify regulatory intervention.”

James M. Lyon, Federal Reserve Bank of Minneapolis; June 2006