Instead, merchants mark up their prices by (at most) the average transaction fee that they pay. If everybody paid by credit card, they would be forced to raise prices a little to stay afloat. This isn’t to say that they don’t make a profit on their credit card sales — but many merchants don’t make enough profit on credit card sales to cover their fixed costs if everybody were to purchase that way.

If the interchange fees are reduced, then merchants get the best of both worlds. First, they aren’t likely to reduce their prices by as much as their costs fall. Second, they can then freely encourage consumers to charge their purchases without it killing their profit margins. (The hope, of course, is that they will spend more on credit.) Either alone is sufficient to justify the pittance being spent on lobbyists.

If you mutual savings bank is anything like mine than you will enjoy years of growth at the expence of the mega-banks which will grow much more slowly or even shrink in responce to the new legislation in total.

In absolute terms this change hurts mutual banks… but in relitive terms it absolutely helps us.

first, we’ve seen this experiment tried in Australia and it didn’t benefit consumers at all. Second, there is no monopoly. Finally, while there are certainly hundreds of thousands of small merchants, there also exists WalMart, Safeway, Kroger, Target, CostCo, McDonald’s, etc. who were all lobbying for this. If they were going to pass on the savings to consumers then why bother spending money to lobby?

do you have any idea how much it costs to operate an atm? most atms deployed by financial institutions are not operated as profit centers. they are extended to increase availability of financial services to customers without driving them to the most expensive means of providing service, a branch.

I am sure there is reform necessary in the system, and I am far more in favor of strengthening protections on overdraft fees.

Nevertheless, I would love to hear, Felix, how you would propose a financial institution such as mine, or the one on whose board you sit, can maintain market position. This certainly means we will have to raise rates on lending, or decrease rates on borrowing, or institute fees on things customers think are freebies. Now, if customers dont bolt instantly to the next bigger bank down the road that can absorb some of the hit more readily, how is paying a fee for the checking account, or making nothing on their CD, or paying more for their mortgage ultimately better for the customer? Now lets assume that they do leave for the bigger institutions, what then? I thought community institutions were a good thing. This just seems to exacerbate the “get big or get out” mentality that has bloated the financial services sector to gross and dangerous proportions. How is that good for the consumer?

I guess its good for merchants. But seriously, did walmart need the help?

Can you please provide rationale for your favoring one set of corporate interests over another set of corporate interests?