Interchange reform that took place in Australia was suppose to benefit consumers and merchants but not only it did not help consumers but also it destabilized the market and changed the way that credit card companies do business in there. Same thing happened in the US after president Obama signed into law Credit Card Consumer Bill of Rights which was suppose to defend consumers from the excesive rates that the credit card companies charge on credit card balance. Instead, we have higher annual fees, higher late fees, less rewards programs and less credit available for the people because credit card companies do not expose themselves to risk as much. This is what happens when the government gets involved in the free market – it destroys opportunity and wealth creation. I hope that the interchange fees will not be regulated in the US.
What can we learn from the Australian experience?
Interchange reform that took place in Australia was suppose to benefit consumers and merchants but not only it did not help consumers but also it destabilized the market and changed the way that credit card companies do business in there. Same thing happened in the US after president Obama signed into law Credit Card Consumer Bill of Rights which was suppose to defend consumers from the excesive rates that the credit card companies charge on credit card balance. Instead, we have higher annual fees, higher late fees, less rewards programs and less credit available for the people because credit card companies do not expose themselves to risk as much. This is what happens when the government gets involved in the free market – it destroys opportunity and wealth creation. I hope that the interchange fees will not be regulated in the US.
http://www.truthonthemarket.com/2009/12/08/regulating-interchange-fees-will-promote-term-repricing-that-will-be-harmful-to-consumers-and-competition/