Forbes.com Op-Ed on the Credit Card Antitrust Settlement

I have a piece at Forbes.com on the recent credit card antitrust settlement, “Consumers Are The Winners In The Visa/Mastercard Antitrust Settlement.”

I will add a caveat here that I lacked space to add there: some aspects of the settlement are not an unqualified boon for consumers.  In particular, the elimination of contract terms that banned surcharging by merchants is bad for consumers and the ubiquity of electronic transactions as an alternative to archaic payment forms like cash and checks.  And since merchants have an incentive to externalize the costs of those systems on consumers the threat of inefficient surcharging concerns me (I use the term “externalize” colloquially here, of course, because payment systems are Coasian in nature, a point which virtually every critic of market-based interchange fees fails to appreciate).  On the other hand, the settlement does restrain the biggest type of potential abuse by merchants, which is imposing above-cost surcharges, as happened in Australia when the ability of merchants to surcharge was mandated by the government.

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