MPC Hill Blast: $9.2 Billion
A Harvard Business School working paper just had some eye-opening findings:
- “We estimate that interchange fees generate approximately $30 billion in annual transfers from cash and debit card users to credit card users.”
- “Because credit card use increases with income, this represents a $9.2 billion annual transfer from low- and middle-income households earning less than $150,000 in annual income to higher-income households.”
- “These transfers are economically significant, comparable in size (but opposite in direction) to major government programs such as SNAP ($120bn), the Earned Income Tax Credit ($57bn) and unemployment insurance ($40bn).”
This means that credit card swipe fees literally rob from the poor and give to the rich — undermining efforts to help low-income people.
The working paper also found:
- “Lower interchange fees lead to increased sales and lower prices.”
- But, hey, who cares about lower prices? (Um, apparently, just about everyone.)
- But, hey, who cares about lower prices? (Um, apparently, just about everyone.)
- Small businesses pay higher swipe fee rates than larger businesses.
- Does that seem right?
The paper makes things very clear — credit card swipe fees hurt low income people and small businesses the most.
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT