According to economic theory, price controls produce shortages. It's likely that capping transaction fees would have unintended consequences, for instance excluding customers from being able to get a credit card in the first place. I'm not against all regulation, but I think we should prefer market-based solutions that remove barriers to entry and that allow more companies to compete in the space.

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mitxela 4 minutes ago | parent | next [-]

This is the argument that was used in Europe when Europe put a very low hard cap on these fees (0.2%). Do you know what actually happened? Nothing happened, everyone kept using cards as normal, actually more people did because it was cheaper, the card companies cried because they got less profit but kept operating because it was still positive, there were no shortages.

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eszed 3 hours ago | parent | prev | next [-]

Europe offers a useful counter-example. They (EU? Most countries? I don't know exactly, but it's immaterial) cap transaction fees, and there's absolutely no shortage of "ways to pay by card". In my experience there are, in fact, more - and, their middle-men have been earlier adopters of both security and convenience features (PIN codes, tap-to-pay, and rapid settlement among them) in which the US sometimes still lags.

What there aren't are rampant cash-back rewards for using a particular card. Or easy access to credit cards with usurorious rates. I think missing out on those is a societally good outcome.

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gblargg 2 hours ago | parent [-]

If you cap price then quality will probably suffer, i.e. less fraud protection, warranty extension, accidental damage coverage, etc.

	▲	simonra 37 minutes ago \| parent \| next [-]
		These things have long been solved through consumer protection legislation in the developed part of the world. Despite responsibility for card fraud, including debit cards, being placed banks and payment processors, northern Europe has a healthy consumer banking market. Vendors being required to warranty purchases for up to 5 years also hasn't killed off commerce or smaller and tiny actors. The home content insurances strike a decent balance for accidents. Sure, the total cost might not be that different in aggregate (you pay for consumer protections through versting being slightly more expensive), but at the same time it's difficult to envision cutting out or severely limiting a profit driven middle man overall being more expensive.
	▲	lossolo an hour ago \| parent \| prev [-]
		> warranty extension, accidental damage coverage What does that have to do with CC fees? In the EU, you get all of these with any payment method, and in many EU countries credit cards are the least used payment option because there are better alternatives.

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SoftTalker 2 hours ago | parent | prev [-]

The credit card companies make the vast majority of their revenue on interest charges. The transaction fees are at least in part returned to the cardholder via rewards programs. That said, I agree that competitive market solutions are better than regulation, where they work.