Posted on 05/24/2022 4:49:45 AM PDT by Kaslin
In this administration, it's always someone else's fault. Inflation is now the No. 1 concern of voters, so the White House first blamed COVID. Then Donald Trump's tax cuts. Then Vladimir Putin. Then meatpackers and the poultry industry, Big Oil and pharmaceutical companies.
Now, Democrats have identified a new inflation scapegoat: plastic. Visa, Mastercard, American Express and other credit cards hidden away in your wallet.
Sen. Dick Durbin (D-Illinois) has had it out for credit cards for almost two decades, even though over that period, credit cards, which were once reserved for the rich, are now nearly ubiquitous in our society. Many stores don't even take cash anymore in the post-COVID world. The benefits and conveniences of paying with a plastic card are easily in the tens of billions of dollars to retailers and shoppers. Stores benefit because shoppers don't have to have cash on hand to make purchases. They also benefit from not having to deal with the exchange of cash, which can lead to theft by unscrupulous employees at the register.
Credit cards are convenient for consumers because we don't have to walk around with hundreds of dollars in our wallets.
But Democrats allege that the interchange fee that credit card companies charge retailers and merchants for their service on transactions is excessive. This interchange fee typically ranges between about 1% to 3% of the retail price of the transaction. If retailers don't want to pay the cost because they think it is exorbitant, they don't have to accept cards and can take cash only. Few retailers don't take plastic every day to avoid paying the fees. It's a free country. But the vast majority of retailers see the benefits far exceeding the costs.
Durbin, a member of the Senate Judiciary Committee, doesn't see it that way. Instead, he blames Visa, Mastercard and Discover for making food and gas more expensive. At a recent hearing, Durbin fumed: "Today, we're going to talk about a hidden fee that fuels the fires of inflation across America every day. What they may not know is this swipe fee is contributing to the problem of inflation."
But for this to be true, interchange fees would have to be higher than before Joe Biden became president and before inflation surged to 8.5%.
But the fees aren't rising. Industry sources report that over recent years, the average merchant fee (for debit, credit and prepaid cards) has fallen slightly.
By the way, merchants and retailers get concrete benefits in exchange for the fees they pay to accept credit cards. Those fees cover the cost of security and fraud protection, infrastructure improvements and consumer benefits programs such as cash back and rewards.
What Durbin and the Democrats want is government price controls on credit card companies. They say there isn't enough competition, but there are at least five major credit cards the public can buy. There is plenty of competition in the industry. Nor is there any evidence that cutting the fees to the retailers will lead to lower prices paid by consumers at the gas pump or the grocery store checkout line.
Today, about 70% of retail transactions take place with credit cards in part because nearly everyone, except those with terrible credit histories, has a credit card these days. Projections say in the next decade, more than 80% of payments will be made with plastic as we move inevitably to digital transactions and a cashless society.
The significant impact of Durbin's price controls will not be to tame inflation but to restrict who can get access to credit cards. In other words, the poor will get hurt the most. Isn't that turning out to be the case with nearly every liberal policy these days?
How far will Durbin get when Biden has been the credit card companies’ man in D.C.?
I paid off everything this year. If I cannot buy it for cash, I’m not buying it. Period!
The biggest culprit causing inflation, is consumption.
If people stopped buying things, inflation would disappear.
Democrats will be blaming people and their consumption for causing inflation.
Like all successful propaganda, there is just enough truth in this to make it plausible. In the face of inflation, people spend what money they have as fast as they can, since waiting devalues it. This increases what economists call the “velocity of money”, which gives a boost to inflation. Not much, but it’s there. Use of credit works the same way - people buy on credit, expecting to pay it off with cheaper money.
IF one wants to kill the online economy, kill credit cards! Ultimately it’s up to consumers to use credit cards or any form of credit responsibly.
I did the same thing about 8 years ago. I use my cards, to get the rewards, but everything is paid off at the end of the month.
Smart move. I use my credit card for every purchase but pay it off every month. No balance ever. I actually raised my credit rating about 50 points.
This interchange fee typically ranges between about 1% to 3% of the retail price of the transaction.
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...and for that fee, the merchant gets full payment for the item, minus the fee, and the credit card agency assumes the responsibility for collecting the balance due from the customer.
Ditto this - for years!
Usury is a sin and it used to be a crime.
Perhaps, if we run out of rope, it will be a crime again.
Democrats want to control credit card fees, just like they want to control all aspects of all transactions. What they WON’T do is lower taxes.
If the benefits exceed the costs, then the retailers should be saving money, which would put a damper on inflation, not exacerbate it.
Dumb-O-Crats.
Since retailers and service providers no longer offer a discount for cash, I pay everything by CC. I auto-pay the entire balances every month with a checking acct that I’ve set up specifically for that purpose so I never miss a payment. I also redeem all rewards against acct. balances.
“Now, Democrats have identified a new inflation scapegoat: plastic.”
I’m sure if they keep searching for the cause of the country’s problems they will eventually determine the cause: The Democratic Party
“The biggest culprit causing inflation, is consumption.
If people stopped buying things, inflation would disappear.
Democrats will be blaming people and their consumption for causing inflation.”
Senator Ernest Fritz Hollings, “There too much consuming going out there.”
Durbin wants to hand out government debit cards to the poor, instead. I mean, why should credit card companies take all the credit for bailing out the indigent when Democrats can keep it for themselves? /s
Interest rates on credit cards is too high. I don’t think anyone has cared since Alfonse Demato
He’s actually right. Credit-buying is a big contributor to inflation.
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