Comments on: Why the payments system should be regulated http://blogs.reuters.com/felix-salmon/2010/06/08/why-the-payments-system-should-be-regulated/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: dbfclark http://blogs.reuters.com/felix-salmon/2010/06/08/why-the-payments-system-should-be-regulated/comment-page-1/#comment-15739 Wed, 09 Jun 2010 23:16:42 +0000 http://blogs.reuters.com/felix-salmon/?p=4179#comment-15739 So I think the biggest part of Zywicki’s argument in your linked post (aside from the conflation of credit and debit and the nigh-total neglect of interest costs) is that he doesn’t think that there’s evidence of monopoly rents being extracted in the retail payments business. You might start by looking at what fees for electronic payments are internationally (hint: lower), but fundamentally this question can’t be understood without numbers. I’d start with 51.22%, Visa’s operating margin, and suggest that a business like that with only a few competitors is likely to be extracting rents.

File this one under “questions answerable with one bloomberg command,” in this case “V equity des3″…

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By: absinthe http://blogs.reuters.com/felix-salmon/2010/06/08/why-the-payments-system-should-be-regulated/comment-page-1/#comment-15678 Wed, 09 Jun 2010 00:21:59 +0000 http://blogs.reuters.com/felix-salmon/?p=4179#comment-15678 I thought the NYT’s lengthier article laid this out reasonably well. It’s a multi-sided market, and it turns out (based on banks’ and CC companies’ behavior) that the competitive spoke isn’t for the consumers or the merchants, but rather for the banks (and competing for banks means screwing over merchants directly, and consumers indirectly).

I think there’s a regulatory ‘middle ground’ here, and that’s to force the CC companies to make interchange etc. fees transparent at time of purchase, and allow merchants to pass this on (presumably within the next few years, since this would involve tech deployment). If the merchants feel they’re being screwed, they’ll pass it on to customers. If consumers see the fees, maybe they’ll pick a more friendly bank/CC.

And if that doesn’t work, use a heavier cudgel. But right now, transparency to consumers and ability for merchants to price-discriminate seems like a reasonable thing to ask for.

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By: Mr.Do http://blogs.reuters.com/felix-salmon/2010/06/08/why-the-payments-system-should-be-regulated/comment-page-1/#comment-15675 Tue, 08 Jun 2010 23:21:01 +0000 http://blogs.reuters.com/felix-salmon/?p=4179#comment-15675 Let the banks charge what they want and let the merchants pass on the cost to the consumer.

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By: Foppe http://blogs.reuters.com/felix-salmon/2010/06/08/why-the-payments-system-should-be-regulated/comment-page-1/#comment-15673 Tue, 08 Jun 2010 22:58:51 +0000 http://blogs.reuters.com/felix-salmon/?p=4179#comment-15673 Not to be rude, but why bother? From what I can tell most of the people at GMU are ideological hacks, who refuse to accept any argument based on the premise that government should intervene and regulate businesses, because they refuse to acknowledge information/power asymmetries, etc.. (The Volokh conspiracy website contains a whole host of them, with the worst example probably being Zywicki’s ‘critique’ of Warren’s “The Two-income trap”, in which he tries to muck up the discussion a bit by equating nominal increases in taxation with relative increases, as well as a few other things an undergraduate can see through. People who are that intellectually dishonest – or, alternatively, that convinced of the stupidity of their readers – really don’t belong in academia. Quite a few of the comments there center on the “private responsibility” red herring. They apparently think it’s fine to allow lenders to defraud their victims, so long as Big Government doesn’t try to level the playing field, because that would destroy “The Market”. http://volokh.com/posts/chain_1187542660 .shtml All very predictable, and very boring, but also just very sad to see that this is what they see as ‘intellectual debate’.)

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