Comments on: Standardize Credit Card Contracts

By: TFB

TFB — Fri, 12 Jun 2009 01:28:03 +0000

@SJ - Some countries like Australia allowed surcharging. The merchants there coped just fine. Some surcharge credit cards. Some don't. See presentation from Australian central bank. With graphical card terminals, displaying the prices for different card types shouldn't be a problem.

By: SJ

SJ — Thu, 11 Jun 2009 23:03:53 +0000

Ya know, that would be a disturbingly elegant solution.

Quick issues would be… if two different cards charge different fees, how do merchants cope? As for charging different surcharges, it''s kind of "repugnant" as freakonomics would state. It's awkward… esp. when it's just two different types of cards. Offering discounts for cash comes easier it seems.

If we went entirely into a digital $$$ system wouldn't that eliminate part of the issue =)? (I wonder if we hit a society that was pure digital $, there'd be surcharges on purchases with physical cash hehe)

1. Looks too dangerous still..
2. And I wouldn't use 2…

By: TIE

TIE — Wed, 10 Jun 2009 16:36:48 +0000

@TFB – I think we both have an interest in two-sided markets, you for credit cards (about which two-sided theory has been applied by several authors), me for health insurance (about which only a little has been done from a two-sided perspective). I'll have posts on two-sided markets soon. If you want links to papers relevant to credit cards, let me know.

By: TFB

TFB — Wed, 10 Jun 2009 13:51:39 +0000

@TIE - Thanks for the pointers. I don't think the government has to step in and provide a "Treasury Express" card. The market in the U.S. is distorted because of oligopoly rules that prohibit merchants from surcharging credit card transactions. The merchants bear the cost, the "transactors" reap the rewards, the credit card companies take the profit in the middle. Under these conditions, credit cards are over-used. We need some policy intervention to realign the cost and benefit. Other countries and the European Union have successfully done that. See the presentations at a recent conference held by Federal Reserve Bank of Chicago, Payments Pricing: Who Bears the Cost?.

By: TIE

TIE — Wed, 10 Jun 2009 13:09:58 +0000

There's been some chatter in the blogosphere lately about a "Treasury Express" card. (Google it to pull up some posts.) For a nice discussion of a typology of credit see also Plastic Fantastic at Interfluidity.com and related posts there.