Originally Posted by
cbn42
That kind of logic only works in a competitive market. Credit card networks essentially operate in an oligopoly, where there is little, if any, price competition.
Competition has been fierce enough to strip AMEX of their former business model to something more similar to Visa and Mastercard's. Gone are the days of AMEX charging a percent or two higher than Visa/MC so they could provide a premium experience to card members. AMEX is now advertising more business friendly (especially small business) terms so they can be accepted in more places than ever. In the vast majority of places, there's at least four networks competing for business.
Can merchants give a discount when the customer chooses PIN debit over "credit" when using a debit card at the register? This would also increase competition and could possibly save the store some money, although I'm not sure how much exactly.
Cellular phone service is the same way... But prices used to be much higher until T-Mobile came in and undercut everyone else. Now you can get a single line with unlimited data, talk, and text for $80 a month because competition (even in an oligopoly) can help lower prices.
Let Visa/MC/Disc/AMEX fight for the lowest interchange fees and highest acceptance.
How do you know that consumers haven't benefitted? There may have been a reduction in price due to this. Prices are always fluctuating due to various factors so it may not be possible to measure it, but a couple of years ago, food prices hit a multi-decade low.
Since Durbin we've seen a loss of debit card rewards programs (mostly), the addition of monthly maintenance fees on checking accounts, an increase in checking account fees, and I'll really go on a limb here - it caused networks and banks to raise awareness on how great credit cards are, since credit cards now generate interchange profits while debit cards ran through debit networks generate next to nothing. Really, it was a dumb decision to implement an amendment that only benefited the merchants who obviously would not pass the savings to customers.