My friends Megan McArdle and Peter Suderman got married in DC this weekend. For the next couple of weeks I’ll be guest-blogging for Megan while she’s on her honeymoon. Here is a post where I give my impressions of her wedding and ponder our promiscuous use of Twitter at the reception. And here I wade into the wonky but important debate over credit card interchange fees. Megan has lined up a stellar team of guest bloggers so I encourage you to subscribe to her blog if you aren’t already. I’ll also be doing a few posts here, so stay tuned.
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- Header picture courtesy of Pam Blunt.
I don’t want to register for Atlantic Monthly, but I have a question about your credit card interchange fee article. What about customers who pay in cash? Aren’t they only hurt by this situation? Merchants can’t charge one price to a card carrying customer and one to a cash carrying customer, so the cash carrying customer ends up paying the higher price.
Card sales are the majority of sales for any business that accepts them, so maybe this is immaterial. However, I feel that this viewpoint punishes non-card carrying customers (or alternatively, customers with low credit scores who can’t get good “perks”), and rewards banks.
Merchants can’t charge one price to a card carrying customer and one to a cash carrying customer, so the cash carrying customer ends up paying the higher price.
They can offer a discount to customer who pay in cash. You sometimes see gas stations do this, for example.
But yeah, to some extent higher interchange fees have the effect of transfering wealth from customers who pay in cash to customers who pay with credit cards.