Showing archive for: “Payments & Payment Networks”
Rate Expectations: Apple and the New Price Regulators
Competition policy is supposed to protect the competitive process, not do double-duty as price regulation. Yet the line between the two appears to be blurring in both a U.S. antitrust case and the European Union’s enforcement of the Digital Markets Act (DMA). On Aug. 14, after years of litigation with Epic Games, Apple submitted a ... Rate Expectations: Apple and the New Price Regulators
A Fee Too Far: Merchants, Surcharges, and the War on Plastic
Earlier this summer, my family took a vacation to Ocean City, Maryland, where the boardwalk offered ice cream, souvenirs, and an unexpected lesson in payment economics. Every retailer we visited added a surcharge of at least 3% for credit-card payments, yet not one posted a sign. I discovered the charges only later, while checking my ... A Fee Too Far: Merchants, Surcharges, and the War on Plastic
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
No Free Lunch at Linney’s Pizza
A pizza shop wants lower debit-card fees. Fair enough. But if it wins, the tab may not land where diners expect. It could reshape administrative law, narrow the Federal Reserve’s discretion, and make ordinary checking accounts more expensive. That is what is at stake in Linney’s Pizza, LLC v. Board of Governors of the Federal ... No Free Lunch at Linney’s Pizza
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 Exit Door Theory of Consumer Finance
Consumer protection often begins with a simple question: Can the consumer walk away? If the answer is no—because switching is hard, data are locked up, markets are fragmented, or new competitors cannot enter—then the problem is not just weak consumer protection. It is weak competition. That is the frame for a deceptively basic question: How ... The Exit Door Theory of Consumer Finance
From Competition to Exclusion: Can Discounts Go Too Far?
When does a discount cross the line from competition to exclusion? That question now sits before a federal district court weighing the U.S. Justice Department’s (DOJ) antitrust case against Visa Inc. and its debit-card business, where Visa holds a 60% share. In the waning days of the Biden administration, on Sept. 24, 2024, the DOJ ... From Competition to Exclusion: Can Discounts Go Too Far?
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
The Visa Case and the Perils of Prosecuting Discounts
The U.S. Justice Department’s (DOJ) antitrust case against Visa—filed under the Biden administration—has put the debit-card market in the spotlight. Recent reporting suggests the DOJ is doubling down on a theory that Visa’s volume-based incentives and routing arrangements amount to unlawful monopolization. That claim warrants skepticism: the practices under attack are routine, efficiency-enhancing features of ... The Visa Case and the Perils of Prosecuting Discounts
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
