I’d like to provide a counterpoint to Michael Bellevue’s letter about the Credit Card Competition Act. This bipartisan federal legislation would introduce competition to the credit card business. That would lower “swipe fees” paid by merchants. These fees cover credit card rewards.
Thanks for your rebuttal letter. I wrote one as well, but the Conway Sun did not post it.
The problem with your argument is simple: while most people would support lowering these fees, the "free market" should determine what the fees are. There is an effective monopoly created and protected by the government which makes it very hard for competition to work. There are good reasons for this, including having a stable financial system. But this lack of competition is what allows the fees to be so ridiculously high.
But "two wrongs don't make a right." A second round of government intervention most likely won't be effective either, because free enterprise will create the proper balance if allowed to work. Government bureaucrats cannot and should not dictate the solutions to problems like these. They can take their best guess but it almost always proves wrong (or is not nimble enough to change as the problem evolves.) So if the government sets some arbitrary "fair" fee, it will become unfair and stop working properly in short order.
The solution is to lower barriers so that real competition can thrive, thereby giving merchants lower-cost choices. That will force the "big banks" and "big credit card" companies into lowering their fees to remain competitive.
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Hi Wharton,
Thanks for your rebuttal letter. I wrote one as well, but the Conway Sun did not post it.
The problem with your argument is simple: while most people would support lowering these fees, the "free market" should determine what the fees are. There is an effective monopoly created and protected by the government which makes it very hard for competition to work. There are good reasons for this, including having a stable financial system. But this lack of competition is what allows the fees to be so ridiculously high.
But "two wrongs don't make a right." A second round of government intervention most likely won't be effective either, because free enterprise will create the proper balance if allowed to work. Government bureaucrats cannot and should not dictate the solutions to problems like these. They can take their best guess but it almost always proves wrong (or is not nimble enough to change as the problem evolves.) So if the government sets some arbitrary "fair" fee, it will become unfair and stop working properly in short order.
The solution is to lower barriers so that real competition can thrive, thereby giving merchants lower-cost choices. That will force the "big banks" and "big credit card" companies into lowering their fees to remain competitive.
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Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.