Great regulation there, Durbin

A new law that was supposed to reduce costs for merchants that accept debit cards has instead sent Mr. Scherr’s monthly processing bills much higher and forced him to reassess the way he does business.

“My choice is to raise prices, discount for cash or get an ATM,” says Mr. Scherr, a lawyer who has been in the coffee-shop business for more than a decade.

Just two months after one of the most controversial parts of the Dodd-Frank financial-overhaul law was enacted, some merchants and consumers are starting to pay the price.

Merchants now are trying to offset their higher rates by raising prices, encouraging customers to pay in cash or dropping card payments altogether.

Redbox, a unit of Coinstar Inc. that rents movies through vending machines, says it is raising prices by 20% to $1.20 a movie starting next month due to higher costs, including debit-card fees. The company declined to specify how much of the increase was due to higher fees.

Merchants asked for the amendment. Their fault.

OK, so what seems to be happening is that stores used to be given a discount on small-purchase debit fees. Then the feds put a limit (similar to that already in place in Europe) on the maximum amount that any debit fee could be, and debit card processors stopped the discount for small purchases.

Now, the debit processors are claiming they have to eliminate the small-purchase discounts because they aren’t making as much money on large purchases. But even if this is true, that logically means that stores with large purchases are paying less in debit fees, right? I

Worst-case scenario is that us consumers come out even: we pay a little more for coffee, but an equal amount less for our big trips to the grocery store. Best case scenario, we pay a little more for coffee, but save even more on bigger purchases. What’s the problem?

Maybe in the land of lollipops and bunnies.

Who here is eagerly awaiting the big players to drop prices because they’re paying less in fees on debit purchases?

crickets

Most likely scenario. We pay more for small purchases because of the increased fees and exactly the same for big purchases. Consumers will not come out ahead under any scenario that’s likely to happen.

I hate to agree but us on the bottom as the final buyer are not going to be better off. :mad::mad:

I, for one, intend to vote with my dollar. That’s why I plan to write-in for Mickey Mouse at the next election. :slight_smile:

He’d probably do less damage than anyone actually on the ballot.

dumb dumb dumb. So now instead of banks making billions in debit card transactions, big box retailers will make billions on the savings from not having to pay the 45 cent average fee.

Big business wins, consumers lose.

And now we have to pay more for coffee. (Good thing I never use my debit cards for small purchases)

Oh noes! They’re going to not accept credit and thus get pushed out of the market as people find credit more and more convenient. They’re going encourage purchases in cash, although the credit card agreements specifically prohibit charging less for cash. And they’re going to raise prices when the market has already shown them the optimum price for their goods.

Yeah, I’m not worried, as long as people don’t buy the bullshit. Okay, so maybe I’m a little worried.

No.

As I understand it, they prohibit charging MORE for credit cards.

But perhaps I’m wrong – do you have a cite?

Wow, are you people seriously working that hard to find something wrong with every single thing the government does? I swear, if the NHS announced a cure for cancer, there’d be an article on the Wall Street Journal “Government cuts into doctor’s incomes!” “Government Forces Local Charities out of Business – Walk for A Cure Cancelled!”, and someone here posting an approving link.

I mean, I hate to get all economics about this, and get into how the free market works and stuff, but bottom line, this regulation is taking money away from somewhere where nobody has much of a choice (there are very few debit card processors and retailers can’t really shop around very much) and putting it into somewhere where consumers do have a choice and there is serious competition (you can compare prices between WalMart and Best Buy right from the comfort of your chair). Last I checked, big box retailers cared a lot about prices, and were pretty aggressive about doing whatever they could to lower prices. So it seems elementary economics that when WalMart can lower its costs, it will lower its prices. Will WalMart benefit from this reg? Certainly! Will consumers benefit also? Sure!

I mean, if you seriously think that the big boxes are going to keep every cent of this savings, then isn’t that a sign that the free market isn’t working in big box retail, too? And isn’t the thing we have built to deal with areas where the free market doesn’t work called, you know, ‘government’?

Isn’t that a distinction without a difference?

No, you’re right. At least MY merchant agreement allows me to give a cash discount but not charge more for credit cards. I definitely didn’t work out any special contract with Visa.

No, it is specificially defined in the merchant agreement. You can’t add surcharges for credit card purchases, but you can offer discounts for cash purchases.

Man, I am so tired of this old trope. Do you not understand how competition works? Sure, some merchants may put the savings in their pocket, but some will see this as an opportunity to lower prices. Can you guess which merchant will get more business?

A little company by the name of Walmart has been doing this for awhile.