Showing archive for: “Payments & Payment Networks”
Gretchen Morgenson Calls for Greater Protection (?) of High-Risk Consumers of Credit
Gretchen Morgenson doesn’t want poor people to have access to consumer credit. At least, that’s what I think she’s saying in her rambling NYT column this week. Congress and federal regulators have recently taken a number of actions that will make it tougher for riskier customers to access consumer credit. First there was the Credit ... Gretchen Morgenson Calls for Greater Protection (?) of High-Risk Consumers of Credit
David Evans Makes the Case Against Revamping Consumer Protection
Economist, co-author, and sometimes TOTM guest David Evans (UCL, University of Chicago School of Law) has an excellent note on “Why Now is Not the Right Time To Revamp Consumer Protection,” based on remarks made at the New York Federal Reserve Board-New York University Conference on Regulating Consumer Financial Products yesterday in New York. Evans ... David Evans Makes the Case Against Revamping Consumer Protection
The faulty logic of "protecting" consumers from the absence of annual fees
Our friend and University of Chicago law professor, Omri Ben-Shahar, fresh off a run participating in our credit card interchange fee symposium, has penned a guest post following up on our ongoing discussion of annual fees: There is no annual fee for shopping at Wal-Mart, but there is an annual fee for shopping at Sam’s ... The faulty logic of "protecting" consumers from the absence of annual fees
Credit card annual fees and the self-appointed consumer protectors
Adam Levitin has a blog post up responding to Todd Zywicki’s recent WSJ editorial on credit card interchange fees. As most readers know, this is a topic of significant interest around here, and Josh blogged about Todd’s op-ed just yesterday. I’m on vacation so I’ll be brief, but I thought Adam’s post was so wrong ... Credit card annual fees and the self-appointed consumer protectors
Zywicki on Interchange Fee Legislation
My colleague (and TOTM Credit Card Symposium participant — posts here and here) Todd Zywicki has an excellent op-ed in the Wall Street Journal today on Congressional legislation aimed at regulating interchange fees. Here’s an excerpt detailing the predictable economic consequences of the legislation: What would happen if the Merchants Payments Coalition gets its way ... Zywicki on Interchange Fee Legislation
Symposium Wrap Up
Thanks to all of our participants and readers for the blog symposium–both the posts and the comments were engaging and thoughtful, and I hope these entries will be helpful in the ongoing debate over credit cards and interchange fees. A concluding point or two: Credit card networks are incredibly complex, and no one fully understands ... Symposium Wrap Up
The Institutional Dynamic: Understand First, Act Second—If At All
I have now had a chance to review the excellent posts on the second day, all of which have a common flavor. They expand the universe of relative considerations that need to be taken into account to decide whether imposing caps on interchange fees enhances or reduces overall social welfare. The narrow perspective on this ... The Institutional Dynamic: Understand First, Act Second—If At All
Merchant Collusion as an Antitrust Remedy
In my first post I discussed the potential for interchange legislation from a consumer protection perspective, that is, would the combination of disclosure requirements coupled with a reduction of interchange fees be likely to improve consumer welfare. I concluded that from the consumer protection perspective, the case for interchange legislation was weak. I noted that ... Merchant Collusion as an Antitrust Remedy
Competitive Payments
Most of the discussion related to pricing at the point of sale has emphasized the “cross-subsidy” between those that pay with cash and checks and those that pay with credit cards. This discussion misses the core of the problem in a market where the use of cash and checks is rapidly declining; the central problem ... Competitive Payments
The Fee Neutrality Claim
Will reduction in interchange fees help or hurt consumers? Two posts yesterday made the conjecture that a reduction in one category of fees would only increase other fees, and that the overall sum of fees will not change. This is the fee-neutrality claim. Todd Zywicki writes: The mathematics of the situation is inescapable: card issuers ... The Fee Neutrality Claim
Allocating the Costs of Fraud
Geoffrey A. Manne is Executive Director of the International Center for Law & Economics and a Lecturer in Law at Lewis & Clark Law School. I take to heart Jim’s claim that fraud is too-little discussed in this realm given its cost, and thus I’ll try my hand at it. Every discussion of the industrial ... Allocating the Costs of Fraud
Assessing the Social Effects of the Use of Credit Cards
The GAO has a fairly extensive discussion of the costs and benefits of credit cards to merchants. However, that discussion focuses on the individual benefits. I would like to step back and put two of those benefits – increased merchant sales and fraud prevention costs – into the larger context that I discussed earlier. First, ... Assessing the Social Effects of the Use of Credit Cards
