Rep. Don Wells
As chairman of the Missouri House Financial Institutions Committee, I spend a great deal of time dealing with issues that result from governmental regulation or interference in the free-market system.
There is a fine line between reasonable government regulation and the creation of rules and laws that interfere in the free market and better lives for us all.
One such issue is the long-standing battle waged by large retailers on interchange fees for electronic payments.
Interchange fees are charged to partially cover the cost of processing debit and credit card transactions. These fees are much cheaper for retailers than the costs of handling cash or checks.
In 2010, Sen. Dick Durbin, D-Illinois, amended the Dodd-Frank Act at the last minute to place an interchange fee cap on debit card transactions. As many experts predicted, the Durbin Amendment is now costing consumers while providing a handsome payout for the larger retailers who lobbied hard for unnecessary regulation.
The Durbin Amendment shifts billions of dollars to large retailers with no corresponding reduction in consumer prices at the cash register.
Worse, consumers now experience higher banking fees and the elimination of reward points and cash-back bonuses, all because the first law of free enterprise was violated: You can’t get something of value for nothing, and when you do someone else pays.
Electronic payments provide great value to consumers and businesses alike when businesses are willing to pay their fair share to provide consumers with greater convenience and safety. Consumers, in turn, reward retailers with greater loyalty and larger purchases. Electronic payments also provide businesses with benefits such as instantaneous guarantee of payment, easier accounting, reduced overhead and expanded markets through Internet and phone purchases.
The companies that provide this payment technology invest huge sums of money in making commerce safe, simple and smart.
All these benefits are partially paid for by transaction fees that are now historically low and easily negotiated in the free market. Everyone was winning with electronic payments until large retailers decided they needed to win more with increased lobbying for government regulation and price fixing.
I am pleased to see the retailers have received a settlement in their class action suit against the payments industry, and that action should, in conjunction with the Durbin Amendment, finally satisfy the retail community.
Through that settlement, retailers got everything they have wanted: Price transparency, the ability to negotiate prices in groups, a reduction in credit card interchange fees and the option for retailers to charge consumers a “check-out fee” when payments are made with a card.
While some large retailers are engaged in opting out of the settlement with the hope of even further increasing profits – proof that they will stop at nothing to get something for nothing – this settlement resolves the interchange fee issue once and for all, and the U.S. Congress should reject any further efforts by lobbyists to legislate a commercial product that works best for everyone in a free market.
Missouri Rep. Don Wells, R-147th District, represents parts of Texas, Phelps, Pulaski and Shannon counties. He is chairman of the Missouri House Financial Institutions Committee and can be reached at don.wells@house.mo.gov.[[In-content Ad]]
