Letter: Keep federal government’s nose out of credit card markets
As a business owner, I am always thinking about my costs. What costs, like utilities,can I predict? What key performance indicators and using to measure our spending effectiveness? I have a variety of costs, but they are always in exchange for goods or services.
One small cost many retailers have is called interchange fees. When a retailer makes a sale that is paid for by a credit card, the retailer pays a percentage of the purchase price to the bank that issued the credit card. It varies but can be a couple percentage points. The bank then uses those fees to fund rewards programs and anti-fraud efforts.
Of course, in a magical world, the retailer would get those services for free. But it takes a sizable investment to maintain a reliable payments network, and those companies maintaining it have the right to charge what they think it’s worth.
Big box stores would rather pocket more profit and are actively lobbying the federal government to make those costs go way. They are pushing new legislation full of credit card routing mandates that will wreck the credit card market using the power of the federal government. Sure, I would love to wish away my expenses, but it’s not fair to use the government to favor one part of the market over another. Our elected officials in Washington need to be wary of this legislation and the precedent it sets.