‘Net Neutrality’ for Credit Cards?

An op-ed I wrote for last Sunday’s Washington Times talked about the battle over the interchange fees that banks and credit card companies charge to retailers. The retailers, including some big chains, are whining about the fees they have to pay and want the government to step in to control how much the card companies charge them. This is another example of the phenomenon described in CEI Warren Brookes Journalism Fellow Tim Carney’s book The Big Ripoff, in which businesses lobby for big government when it favors their bottom line. And given the experience in Australia when the government imposed price controls on retailer fees, American consumers certainly will be ripped off if the government gives in to retailer demands.

What the retailers are asking for is sort of a “net neutrality” regime for credit cards. The credit card companies, on the retailer side, would be considered a “common carrier.” However, as with “net neutrality” for the Internet, this would leave consumers paying the full costs for improvement and innovations in the system.