An Anon over at Breitbart’s Big Government site is quite outraged about something Senator Dick Durbin (D-Ick) is working on. Normally, I’d be right behind whomever it is writing that and be outraged, but not this time.
The Durbin amendment imposes a price control scheme on the fees oil companies and retailers pay when they accept payment by credit cards.  The amendment was conceived and pushed for by lobbyists for big oil companies and big retailers like BP and Wal-Mart.  Their goal is simple — shift the costs of accepting credit cards from their bottom line to the consumers.
Durbin admitted that he offered the amendment after detailed discussions with a big retailer CEO.  The bottom line is that the Durbin amendment will put billions of dollars into the pockets of Wal-Mart, big oil companies like BP and other big box retailers who depend on consumers and their credit cards for revenue.  It’s unfathomable that while the government has opened a criminal investigation into BP, the US Senate wants to hand them a massive check.  Under the Durbin “BP Bailout†amendment, giant corporations will no longer be required to pay their fair share of the costs of receiving these services. Consumers will now pay those costs.
I like this idea for one big reason: There is too much credit out there.
What was one of the major factors in the Real Estate bubble?
Easy credit.
Likewise, what was one of the major factors leading to the stock market crash in 1929?
Also, easy credit.
People treat credit like cash. I’d lay $20 down that if you asked the average American what the interest rate is on their plethora of individual credit cards, they would be wrong. And I’d put another fiver on top of that that half of those people don’t know and are just guessing.
You want to cut back on ignorant use of consumer credit. Charge them a fee for each use of the credit.
Why should the retailer pay this fee? What is the benefit to them, really?
Sure, it means you have more options when it comes to paying them, hopefully leading to more sales for the retailer.
But it is also a convenience to you to be able to pay them without using legal tender. So why should you get a free ride?
Not to mention that those of us who pay cash are paying higher prices for products because the store makes less money on each sale when a person pays with credit.
Sorry, y’all, but while I’m not exactly happy that Congress is involved, and I don’t like that there’ll be a new law made, I’m liking this idea.
Then again, I don’t use my cards all that often.
WalMart has a habit of lowering prices in response to reductions in overhead. If they don’t lower retail prices to reflect the lower cost (to them) of transactions, some other bright boy will, and he’ll eat their lunch. Meanwhile, consumers with any sense will notice that they can get a lower price by paying cash, and they’ll start carrying cash again.
It’s a mystery to me how this is a “bailout” for anybody. It’s a win for highly price-conscious consumers. For everybody else, it’s a wash.
The story is hyperbolic bullshit.
I remember when stores would offer a discount for cash payments. Been a long time since I saw one though. I use a debit card for almost everything and cash for the rest. Haven’t carried a balance on a credit card for many years. If they put the fee back on the consumer (where it belongs IMO), my purchasing habits would likely change. BTW this fee is why you can’t make payments to gov’t agencies by credit or debit cards; the state won’t eat the fee like a retailer can/will.
Retailers should have to pay for the service of offering credit cards as a payment option for their customers just like they pay for the services of having electricity in their stores or having trucks to deliver their products. Just like consumers pay for having credit cards by paying finance charges and interest rates etc. There should be no free lunch.
And, for those who think Mr. Durbin has a good idea here, don’t forget about unintended consequences. Mr. Durbin has shown himself to be extraordinarily stupid before.
bruce