Letter to the Editor: Retailers Want to Shift Their Costs onto Consumers

Letter to the Editor: Retailers Want to Shift Their Costs onto Consumers

December 03, 2009
Originally published in The Washington Examiner

It's a real pity that The Examiner's Nov. 27 lead story - billed with the screaming front-page headline "Credit cards show no pity" - misstates the findings of a new government study and sides with self-interested retailers who wish to shift their credit card processing costs to consumers. The article asserts that "a report from the Government Accountability Office, Congress' investigative arm, said consumers were paying higher prices as merchants passed on interchange fees to their customers." But the GAO report actually says that it is "difficult to measure" how much, if any, of the fees retailers pay to credit card companies were passed on to consumers. Further, the GAO concludes that if Congress restricts interchange fees, "consumers may face higher costs for using their cards," and they "may not experience lower prices" from retailers. The GAO noted that when Australia capped interchange fees, card holders faced higher fees and fewer rewards to make up the lost card revenue from merchants. There was no evidence that merchants passed on any of their $1.1 billion in savings to consumers. Retailers engaging in this misleading campaign against interchange fees apparently have "no pity" for American consumers who would also get soaked from similar price controls from Congress.