credit cards – The North State Journal

0
Senate Majority Whip Dick Durbin, D-Ill., joined at right by Senate Majority Leader Chuck Schumer, D.N.Y., answers a question during a press conference following a closed-door political luncheon at the Capitol in Washington on Tuesday, May 24, 2022. (AP Photo/J. Scott Applewhite)

In this administration, it’s always someone else’s fault.

Inflation is now voters’ No. 1 concern, so the White House blamed COVID first. Then Donald Trump’s tax cuts. Then Vladimir Putin. Then the meatpackers and the poultry industry, the big oil and pharmaceutical companies.

Now, Democrats have identified a new scapegoat for inflation: plastic. Visa, Mastercard, American Express and other credit cards hidden in your wallet.

Sen. Dick Durbin (D-Illinois) has been going after credit cards for nearly two decades, even though during that time credit cards, once only for the wealthy, are now nearly ubiquitous in our society . Many stores don’t even take cash anymore in the post-COVID world. The benefits and conveniences of paying with a plastic card easily run into the tens of billions of dollars for retailers and shoppers. Stores benefit because shoppers don’t need to have cash to make purchases. They also benefit from not having to deal with exchanging cash, which can lead to theft by unscrupulous employees at the checkout.

Credit cards are convenient for consumers because we don’t have to walk around with hundreds of dollars in our wallets.

But Democrats allege the interchange fees that credit card companies charge retailers and merchants for servicing transactions are excessive. This interchange fee generally ranges between approximately 1% and 3% of the retail price of the transaction. If retailers don’t want to pay the cost because they think it’s exorbitant, they don’t have to accept cards and can only take cash. Few retailers do not take plastic every day to avoid paying the fees. It is a free country. But the vast majority of retailers see the benefits far outweighing the costs.

Durbin, a member of the Senate Judiciary Committee, doesn’t see it that way. Instead, he blames Visa, Mastercard and Discover for making food and gas more expensive. At a recent hearing, Durbin fumed, “Today we’re going to talk about a hidden tax that’s fueling the fires of inflation every day across America. What they may not know is that these sweeping fees are contributing to the inflation problem.

But for that to be true, interchange fees would have to be higher than before Joe Biden became president and before inflation soared to 8.5%.

But the fees are not increasing. Industry sources report that over the past few years, average merchant fees (for debit, credit and prepaid cards) have fallen slightly.

By the way, merchants and retailers get tangible benefits in exchange for the fees they pay to accept credit cards. These fees cover the cost of security and fraud protection, infrastructure improvements, and consumer benefit programs such as cash back and rewards.

What Durbin and the Democrats want is government price controls on credit card companies. They say there’s not enough competition, but there are at least five major credit cards the public can buy. There is a lot of competition in the industry. There is also no evidence that reducing the fees charged to retailers will lead to lower prices paid by consumers at the gas pump or at the grocery checkout.

Today, about 70% of retail transactions take place with credit cards, in part because almost everyone except those with bad credit histories has a credit card these days. . Projections indicate that over the next decade, more than 80% of payments will be made with plastic as we inevitably shift to digital transactions and a cashless society.

The significant impact of Durbin’s price controls will not be to control inflation but to restrict access to credit cards. In other words, the poor will be the most affected. Isn’t that the case with almost all liberal politics these days?

Stephen Moore is a senior researcher at Freedom Works. He is also the author of the new book: “Govzilla: How The Relentless Growth of Government Is Devouring Our Economy”.


Source link

Share.

Comments are closed.