2arrs, 2ells - Squashed: Some Pros and Cons of the Financial Reform Bill (and Titanic Metaphors)

1st July 2010

Link reblogged from Squashed with 17 notes

Squashed: Some Pros and Cons of the Financial Reform Bill (and Titanic Metaphors) →

The Federal Reserve will have authority to regulate credit and debit card swipe fees. So that extra 3% (or so) hidden tax that you’re paying on all your purchases to fatten the credit card companies may eventually be reduced. (This doesn’t have huge implications for keeping the ship afloat. It’s just a really nice thing. Like free drinks in the grand saloon.)

Dan’s analysis, is (as usual) excellent, but I do have one nit to pick.

There absolutely is a hidden 2-3% tax on purchases going to the credit card companies. However, savvy consumers get the majority of this tax rebated via rewards credit cards (sometimes in the form of “points” or airline miles, but sometimes as cash). So the tax really falls on people who pay cash or use rewards-less debit/credit cards.

As a savvy consumer, I’m a bit miffed about any changes to this system - especially because I don’t think a drop in fees will lead to lower prices in the short term. I would, however, like to see efforts taken to lower the barriers to entry for the market. If there were an easy way for Google (for example) to issue a physical card that’s tied in to the Google Checkout service, I could see greater competition leading to lower fees (and consumer benefits) very quickly.

Source: squashed