The Price of Peace in the Swipe-Fee Wars
After 21 years, two failed settlements, and enough economic testimony to qualify as its own industry, the great interchange-fee war may finally be nearing a cease-fire. The terms are imperfect, and the case never had much economic merit. Even so, the proposed settlement may offer the best available escape from a dispute whose legislative sequels ... The Price of Peace in the Swipe-Fee Wars
Private Credit, Public Panic: Why Life Insurers Are Stronger Than the Headlines Suggest
Private credit has become the financial system’s latest designated villain: opaque, fast-growing, and—depending on the headline—one bad quarter away from dragging insurers, banks, and retirees down with it. For the past two years, warnings about life insurers’ private-credit investments have become a staple of financial commentary. In 2024, the International Monetary Fund cautioned that private ... Private Credit, Public Panic: Why Life Insurers Are Stronger Than the Headlines Suggest
Robin Hood Carries a Credit Card
The “reverse Robin Hood” hypothesis is back, wearing a fresh econometric hat and carrying a very large number. The claim is familiar: credit card rewards programs let affluent cardholders pick the pockets of poorer consumers who pay with cash or debit. The new estimate is punchier. In a recent working paper, a group of academics ... Robin Hood Carries a Credit Card
The Myth of the Unwanted Internet
In a recent podcast, New York Times journalist Ezra Klein hosted lawyer Tim Wu and writer Cory Doctorow for a conversation titled “We Didn’t Ask for This Internet.” They ran through a familiar bill of indictment against the modern internet: surveillance, manipulation, algorithmic pricing, the squeezing of creators, spam, fraud, and the dehumanization of work. ... The Myth of the Unwanted Internet
Half a Swipe, Whole Lot of Mess: Platform Economics and the Interchange Fee Cases
Interchange-fee regulation now anchors at least three federal appellate cases. Courts will get them wrong unless they recognize a threshold fact: payment-card networks are multisided platforms. Interchange fees are the amounts card-issuing banks withhold from a transaction before paying merchant-acquiring banks. On a $100 purchase with a 2% interchange fee, the issuing bank keeps $2 ... Half a Swipe, Whole Lot of Mess: Platform Economics and the Interchange Fee Cases
When Theoretical Rigor Misses Reality: Why Interchange-Fee Caps Won’t Benefit Consumers
Interchange fees charged by payment networks have in recent years been one of the most heated and persistent battles in financial regulation. These fees—typically 1-3% of credit-card transaction value in the United States—are charges that banks impose on merchants for processing credit- and debit-card transactions. What started as an obscure technical detail has exploded into ... When Theoretical Rigor Misses Reality: Why Interchange-Fee Caps Won’t Benefit Consumers
Card-Fee Bills Would Benefit Big-Box Retailers but Harm Small Merchants
Texas’ House and Senate are considering legislation to regulate payment-card transactions, with bills that proponents claim would save millions of dollars for merchants and consumers. The evidence, however, suggests that the benefits would accrue mostly to big-box stores, while smaller merchants and consumers will both suffer. H.B. 4061 and S.B. 2056 would prohibit card-issuing banks ... Card-Fee Bills Would Benefit Big-Box Retailers but Harm Small Merchants
Credit-Card Price Controls Are Counter Productive
U.S. Reps. Anna Paulina Luna (R-Fla.) and Alexandria Ocasio-Cortez (D-N.Y.) have introduced legislation that would cap credit-card interest rates at 10%, with the claim that it would help poorer Americans. Unfortunately, both economic theory and centuries of evidence demonstrate that the effect would be quite the opposite. When the government sets a ceiling on the ... Credit-Card Price Controls Are Counter Productive
The Credit Card Anti-Competition Act
In 2022, and then again in 2023, Sens. Richard Durbin (D-Ill.) and Roger Marshall (R-Kan.) introduced legislation that would have required U.S. issuers of most Visa- and Mastercard-branded credit cards to include a second network on their cards, and to allow merchants to route transactions on a network other than the primary network branded on ... The Credit Card Anti-Competition Act
The Hidden Wealth of Payment Cards: How Innovations in Payments Transform Society
It’s a dreary December morning and, on your way to work, you stop at a coffee shop. There are only three people in line, so you assume you’ll be served quickly. But after a few minutes, you notice the customer at the front of the queue fumbling as they laboriously count out the exact change. ... The Hidden Wealth of Payment Cards: How Innovations in Payments Transform Society
CFPB’s Overdraft Fee Price Controls Would Be Counterproductive
The Consumer Financial Protection Bureau (CFPB) announced a final rule last week to impose price controls and onerous disclosure rules on overdraft fees charged by those banks and credit unions with assets of more than $10 billion. At first glance, such interventions might seem like a win for consumers, particularly those with low incomes who ... CFPB’s Overdraft Fee Price Controls Would Be Counterproductive
What the IMF Gets Wrong About Costa Rica’s Payment-Card Caps
The Asamblea Legislativa de la República de Costa Rica (Costa Rica’s legislature) moved in 2020 to empower the Banco Central de Costa Rica (BCCR), the nation’s central bank, to impose price controls on fees charged by both payment-card issuers and acquirers. I have written previously about the perverse effects these price controls can generate (here, ... What the IMF Gets Wrong About Costa Rica’s Payment-Card Caps
