Feedback: Someone Has to Pay for Debit

Matthew Cantor's feedback ["Interchange Amendment is Pro-, Not Anti-Consumer," May 24] to an earlier Viewpoint calling Sen. Durbin's amendment anti-consumer is disingenuous, at best. Someone has to pay for the debit card system. There are two possibilities, the customer or the merchant. We know the merchant doesn't want it to come out of its income but taking that burden off of the merchant and putting it on the card holder instead is hardly pro-consumer.

As a consumer, I am rewarded quite well for using a card instead of writing a check when I buy something. I get to use the bank's money free of charge for 30 days and get a number of rewards as well, including free plane tickets more than once a year. Taking those advantages away is not good for me. Duh!

Cantor argues that the advantage of the interchange subsidy is outweighed by the increased cost of goods I buy. Sorry, but there is no way I would ever recoup the lost value of rewards and interest free use of a card by reduced prices. Interest on my balances and loss of frequent flyer points would cost me much more than a 2% reduction in the cost of things I buy, assuming that the full cost of the interchange was passed on in lower prices, which has apparently not happened other places where interchanged is capped.

Even if the full savings was passed on to me, the offset would not be equal. Rewards programs often rely on multiple subsidies. Frequent flyer points require support from both the card issuer and the airline. Remove one subsidy and they all go away. There is no quid pro quo for consumers in ending interchange.

Cantor's argument also ignores the benefit the merchant receives from the use of cards. Debit cards replace checks and do not bounce. Losses due to bad checks were large before plastic. This savings directly offsets the cost of interchange. Nothing would offset the cost to consumers if they had to pay the full cost of the debit card system through interest and fees.

Merchants have a legitimate gripe if they cannot project the cost of interchange when setting prices for their goods. Beyond that, their only goal is to shift the cost of the card system to cardholders. No amount of sophistry can pass that off as pro-consumer.