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Assessing The Costs & Benefits Of Credit Card Rewards: A Response To Who Gains And Who Loses From Credit Card Payments? Theory And Calibrations, Steven Semeraro
Assessing The Costs & Benefits Of Credit Card Rewards: A Response To Who Gains And Who Loses From Credit Card Payments? Theory And Calibrations, Steven Semeraro
Steven Semeraro
Abstract: Assessing the Costs & Benefits of Credit Card Rewards: A Response to Who Gains and Who Loses from Credit Card Payments? Theory and Calibrations For two decades, economic and legal academics have speculated about the impact of the fees that merchants pay for credit card acceptance. Since all customers pay the same price, the theory goes, everyone pays for the benefits that go only to credit card users. A recent Federal Reserve Bank of Boston (FRBB) policy paper written by economists Scott Schuh, Oz Shy, and Joanna Stavins entitled Who Gains and Who Loses from Credit Card Payments? Theory …
The Reverse-Robin-Hood-Cross-Subsidy Hypothesis: Do Credit Card Systems Effectively Tax The Poor And Reward The Rich?, Steven Semeraro
The Reverse-Robin-Hood-Cross-Subsidy Hypothesis: Do Credit Card Systems Effectively Tax The Poor And Reward The Rich?, Steven Semeraro
Steven Semeraro
Robin Hood and his band of merry men infamously, if apocryphally, robbed from the rich and gave to the poor. Over the last decade, some economists have postulated that credit card companies do the opposite – forcing low-income cash customers to pay higher prices for retail goods that effectively fund the frequent flier miles and other rewards that go predominantly to affluent cardholders. Because the credit card systems prohibit surcharging, everyone pays the same price. But, these analysts reason, merchants inflate their prices across the board to cover the cost of credit card acceptance. While credit card customers are rewarded …
Credit Card Interchange Fees: Three Decades Of Antitrust Uncertainty, Steven Semeraro
Credit Card Interchange Fees: Three Decades Of Antitrust Uncertainty, Steven Semeraro
Steven Semeraro
This article re-examines the historical, economic, and legal analyses of credit card interchange fees, rejecting the standard assumptions that (1) collectively set interchange fees are unlikely to harm consumers and (2) these fees cannot feasibly be set in a competitive fashion. Through a new historical assessment and consideration of the most recent economic learning, this article shows that under current market conditions collusively set interchange fees are likely to harm consumers and thus violate the antitrust laws. In addition, a competitive remedy is feasible. The six largest Visa and MasterCard issuers, which are larger than the Discover Card System and …
Credit Card Interchange Fees: Three Decades Of Antitrust Uncertainty, Steven Semeraro
Credit Card Interchange Fees: Three Decades Of Antitrust Uncertainty, Steven Semeraro
Steven Semeraro
This article re-examines the historical, economic, and legal analyses of credit card interchange fees, rejecting the standard assumptions that (1) collectively set interchange fees are unlikely to harm consumers and (2) these fees cannot feasibly be set in a competitive fashion. Through a new historical assessment and consideration of the most recent economic learning, this article shows that under current market conditions collusively set interchange fees are likely to harm consumers and thus violate the antitrust laws. In addition, a competitive remedy is feasible. The six largest Visa and MasterCard issuers, which are larger than the Discover Card System and …