Monetary policy analyst Steve Swedberg is cited in Reason regarding the decision to cap credit card fees.

Arguments back and forth convinced a federal judge to bar enforcement of the law—which, after delays, was set to take effect in July. State legislators almost simultaneously put the law on hold until July 2027. That may be for the best, given the problems that state intervention in financial transactions could cause.

“While purported to be relief for merchants, the law is more likely to produce unintended consequences for consumers, financial institutions, and the majority of the merchants the law was meant to help,” argues Steve Swedberg of the Competitive Enterprise Institute (CEI) in a report published last week. “More broadly, the IFPA raises fundamental questions about whether state-level payment regulation is compatible with the uniform standards required for a functioning national payments system.”

Popular or Not, Fees Offset Expenses

Swedberg points out that payment networks are intermediaries in transactions between cardholders and merchants. It’s a potentially lucrative business, but one that requires significant infrastructure behind the scenes: “In 2025, Visa reported operating expenses of more than $16 billion. These expenses include network and processing costs, personnel, and depreciation of technology and equipment.” Mastercard reports similar expenses. Banks and credit unions that issue cards also must maintain infrastructure.

Fees are meant to offset expenses. Hand-waving them away as hidden costs doesn’t erase the reason they exist, even if people don’t want to pay them on charges for taxes and tips.

Swedberg emphasizes that this isn’t the first attempt to limit swipe fees. He points to the Durbin Amendment, enacted as part of the 2010 Dodd–Frank Act, that capped debit card interchange fees charged by large financial institutions.

Read the full article at Reason.