The Two Commercial Interests, Hey?

Normally, David Nicklaus is pretty reasonable in his columns for the St. Louis Post-Dispatch. But in his latest, In heavyweight fight over card fees, consumers are the likely losers, he underemphasizes an important point:

When two big commercial interests start a fight, consumers would be wise to watch their wallets.

So it is with the dispute between banks and retailers over swipe fees, which the store incurs every time you pay with plastic. The fees average about 2 percent of each transaction and have risen over time.

Congress capped the swipe fee on debit card transactions, costing banks an estimated $8 billion a year.

So whose fault is it that you’re going to have to pay a premium, maybe, at certain shops to use a credit card?

Congress. Or, more to the point, the former Democrat-controlled national legislature that gave us Dodd-Frank.

I’ve given a stray thought to the impact of this settlement. Will retail establishments start charging a 5% premium (or giving a 5% discount) to people who pay with cash? Maybe.

If Amazon doesn’t do it, small businesses (or larger businesses) that charge 5% extra will lose business to Amazon and larger businesses that don’t charge the premium. That business decision will cause more smaller businesses to leave the field. Thanks, Congress! Of course, this will get blamed on large banks and credit card companies who need to maintain their product margin and additional costs of compliance with Dodd-Frank and its Frankenagency’s whims (what, doesn’t the Secretary of Health and Human Services get to arbitrarily impose anything with this legislation? How did she get left out of something passed between 2009 and 2011?).

Hey, let’s travel on a tangent: Why, this very week, I ate at a small business that had a sign offering a 5% discount for cash. When I paid for the bill with cash, the discount was not applied. I didn’t quibble with it. That 5% just came out of the tip. But whenever I see all those twee signs, pictures-with-words that pass for insight on Facebook, and whatnot that says “Buy from a small business” as though a small business is inherently more moral than a large business, I can’t help but think of the times when I’ve been rooked, overcharged, or otherwise immorally treated by a small business. Caveat emptor, I know, but still, the sentiment is twee. I buy from whomever is convenient, least expensive, best quality, and whatnot. Sometimes I like to buy from a small business because I like to support small business. But there’s no moral compulsion to do so, and some small business people are only limited in their immorality by the fact that Bank of America or Unilever have not bought them out and brought them into the executive ranks of a large business.

Where was I? Oh, yes. To sum up: Dodd-Frank sucks, and Congressional action has made things more expensive for consumers, but again in a fashion where they can frame capitalism for it.