MPC Hill Blast: Lower Swipe Fees, Consumers Save
We wrote last week about a Harvard Business School working paper that presented some eye-opening findings. Here is another big one from the paper:
- “Lower interchange fees lead to increased sales and lower prices.”
It is as simple as that. Of course, lower fees mean lower prices. Retail is incredibly price competitive. Here is more from the working paper:
- “A one-percentage-point increase in interchange causes a roughly one-for-one increase in prices.”
- “These results align with the predictions of Amiti et al. (2019), who show that small firms tend to pass through cost shocks one-for-one to prices.”
In the final analysis:
- The working paper “provides empirical evidence that small restaurants pass interchange fees through to higher retail prices.”
With about $198 billion collected in swipe fees last year, American families are paying dramatically higher prices than they should be.
One analyst estimates that the average family pays as much as $1,800 more each year due to swipe fees.
That is wrong. American families and the economy as a whole need the “increased sales and lower prices” that come from lower swipe fees.
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT