Priceless? The social costs of credit card merchant restraints

Harvard Journal on Legislation

Volumn 45, Issue 1, 2008, Pages 1-58

  Levitin, Adam J ^a  

^a GEORGETOWN UNIVERSITY LAW CENTER   (United States)

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EID: 41849116673     PISSN: 0017808X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (361)

1. Slate's Ad Report Card: The End of "Priceless" (NPR radio broadcast Mar. 16, 2006), available at http://www.npr.org/ templates/story/story.php?storyId=5283958.
2. David Humphrey et al., What does it Cost to Make a Payment?, 2 REV. OF NETWORK ECON. 159, 162-63 (2003).
3. Id. These figures include costs such as handling and theft, as well as fees charged to merchants by banks and payment networks.
4. For different calculations, see Daniel D. Garcia-Swartz et al., The Move Toward a Cashless Society: A Closer Look at Payment Instrument Economics, 5 REV. NETWORK ECON. 175 (2006)
5. and Daniel D. Garcia-Swartz et al., The Move Toward a Cashless Society: Calculating the Costs and Benefits, 5 REV. NETWORK ECON. 199 (2006).
6. See also Adam J. Levitin, Payment Wars: The Merchant-Bank Struggle for Control of Payment Systems, 12 STAN. J.L. BUS. & FIN. 425, 427 (2007) for a presentation of alternative measures of cost.
7. Merchant Processing Fees, NILSON REP., Apr. 2007, at 7, 7. The Nilson Report is a payment industry publication with proprietary data sources, the origin and accuracy of which are unknown.
8. The Interchange Industry Is Bigger than . . ., http://aneace.blogspot. com/2006/05/interchange-industry-is-bigger-than.html (May 12, 2006, 6:05 CST) (basing comparison on interchange fees totaling $40 billion in 2005).
9. The term "merchant restraints" is not used by credit card networks. It is a shorthand created by plaintiffs' attorneys in antitrust litigation against credit card networks. Credit card networks have hundreds of rules, most of which are innocuous to competition. Only a handful of rules creates competitive problems. I adopt the term "merchant restraints" solely for the sake of convenience.
10. See infra Part IV. D.
11. See generally infra Part IV.
12. Adam J. Levitin, Priceless? The Competitive Costs of Credit Card Merchant Restraints, 55 UCLA L. REV. (forthcoming 2008).
13. See Major League Baseball v. Crist, 331 F.3d 1177, 1186 (11th Cir. 2003) (stating that "antitrust laws form the bedrock of our capitalist system premised upon competition, and that anticompetitive conduct harms consumer welfare.")
14. Benjamin Klein et ai., Competition in Two-Sided Markets: The Antitrust Economics of Payment Card Interchange Fees, 73 ANTITRUST L.J. 571 (2006) (arguing that allegations of cross-subsidization lack empirical basis).
15. This background economics section is based on Levitin, supra note 9.
16. For Internet commerce in particular, there is often yet another party, the gateway payment provider, that provides the software link between the merchant's website and the acquirer bank.
17. Ramon P. DeGennaro, Merchant Acquirers and Payment Card Processors: A Look In-side the Black Box, 91 FED. RES. BANK OF ATLANTA ECON. REV. 27, 31 (2006), available at http://www.frbatlanta.org/filelegacydocs/erq106_degennaro.pdf.
18. What's at Stake in the Interchange Wars, THE GREEN SHEET, Nov. 28, 2005, at 70.
19. Merchant Account Rates, Merchant Seek, http://www.merchantseek.com/ merchant_ accounts_rates.htm (last visited Oct. 17, 2007).
20. See, e.g., PSW, Inc., Merchant Services Agreement 4, available at http://www.pswbilling.com/contractno-cc AS-all.pdf (last visited Oct. 17, 2007). High risk account categories include travel merchant accounts, adult entertainment merchant accounts, pharmacy merchant accounts, telemarketing merchant accounts, Internet merchant accounts, and on-line gambling. Guardian Financial Services, Inc., Why Is an Account Considered a High Risk Merchant Account?, http://www.guardianfinance.com/high_risk_merchant_account.htm (last visited Oct. 17, 2007);
21. Adult Card Processing.com, High Risk Merchant Accounts, https://secure.gowebs.net/adultcardprocessing/index.html (last visited Oct. 17, 2007).
22. See also Jon Mooallem, A Disciplined Business, N.Y. TIMES MAG., Apr. 29, 2007, at 28 (identifying a 15% merchant discount fee for adult, on-line services).
23. Visa's ACS assessment is fixed at 0.0925% of the transaction value. MasterCard's ACS assessment is fixed at 0.0950% of the transaction value. MasterCard's actual ACS costs appear to be around 130 per transaction. Dennis W. Carlton & Alan S. Frankel, Transaction Costs, Externalities and "Two-Sided" Payment Markets, 2005 COLUM. BUS. L. REV. 617, 633 (2005).
24. This term is made more opaque by the fact that American Express and Discover have only one fee - a merchant discount fee.
25. William W. Shaw, A Question of Integrity, CREDIT CARD MGMT., Feb. 2005, at 48 (noting how the function of the interchange fee has changed over time).
26. See also AMY DAWSON & CARL HUGENER, DIAMOND MGMT. & TECH. CONSULTANTS, A NEW BUSINESS MODEL FOR CARD PAYMENTS 9 (2006), available at http://www.diamondconsultants.com/PublicSite/ ideas/perspectives/downloads/ INSIGHT%20-%20New%20Card%20Business%20Model.pdf.
27. DAWSON & HUGENER, supra note 20, at 9.
28. See, e.g., Visa U.S.A. Consumer Credit Interchange Reimbursement Fees (Rates Effective Oct. 2007), http://usa.visa.com/download/merchants/ Interchange_Rate_Sheets.pdf; MasterCard U.S. and Interregional Interchange Rate Programs (Rates Effective Apr. 2007) (on file with the Harvard Journal on Legislation).
29. Press Release, Visa USA, Visa USA Updates Interchange Rates (Apr. 12 2007), http:// corporate.visa.com/md/nr/press695.jsp.
30. Visa U.S.A. Consumer Credit Interchange Reimbursement Fees, supra note 22. By comparison, the average interchange rate in 2007 for off-line (signature) debit cards was 1.11% and for on-line (PIN) debit cards was 0.46%. Press Release, Pulse EFT Association, New Comprehensive PULSE Debit Industry Study Reveals Continued Growth in Debit Card Market (Feb. 28, 2007), http://home.businesswire.com/portal/site/google/index.jsp?ndmView Id=news_view&newsld=20070228005200&newsLang=en.
31. Some large merchants, though, are able to negotiate which interchange category they are placed in and even get the networks to create special categories for them. See Renata B. Hesse & Joshua H. Soven, Defining Relevant Product Markets in Electronic Payment Network Antitrust Cases, 73 ANTITRUST L.J. 709, 714 n.19 (2006).
32. See, e.g., North American Credit Card Association, Our Rates, http://www.naccadirect. com/nacca/rates.aspx?id=2 (last visited Oct. 17, 2007).
33. DeGennaro, supra note 14, at 37.
34. Major factors in a merchant's risk profile are its previous transaction volume, fraud rate, chargeback rate, and industry. What's at Stake in the Interchange Wars, supra note 15, at 70;
35. see also New Interchange Rate Highlights, THE GREEN SHEET, Mar. 27, 2006, at 56-63.
36. Levitin, Payment Wars, supra note 3 at 425, 470-71.
37. Howard H. Chang, Payment Card Industry Primer, 2 PAYMENT CARD ECON. REV. 30, 46 (2004).
38. Id.
39. DAVID S. EVANS & RICHARD L. SCHMALENSEE, PAYING WITH PLASTIC: THE DIGITAL REVOLUTION IN BUYING AND BORROWING 261-262 (2d ed. 2005).
40. North American Credit Card Association, supra note 26.
41. Id.
42. Id.
43. Ten states forbid surcharging outright. CAL. CIV. CODE § 1748.1(a) (Deering 2004);
44. COLO. REV. STAT. § 5-2-212(1) (2004);
45. CONN. GEN. STAT. § 42-133ff(a) (2003);
46. FLA. STAT. § 501.0117 (2004);
47. KAN. STAT. ANN. § 16a-2-403 (2003);
48. MASS. GEN. LAWS eh. 140D, § 28A(a)(2) (2004);
49. ME. REV. STAT. ANN. tit. 9-A, §§ 8-103.1.E, 8-303.2 (2003);
50. N.Y. GEN. BUS. LAW § 518 (McKinney 2004);
51. OKLA. STAT. tit. 14A, § 2-417 (2004);
52. TEX. FIN. CODE ANN. § 339.001(a) (Vernon 2004).
53. In addition, Minnesota permits a surcharge, but limits it to 5%, MINN. STAT. § 325G.051(a) (2003);
54. New Hampshire bans surcharges specifically for travel agencies, N.H. REV. STAT. ANN. 358-N:2 (2006);
55. and Kentucky's Attorney General has opined that restaurants may not reduce the amount of tips remitted to employees by the amount of the discount rate if the tips are placed on credit cards, Op. Ky. Att'y Gen. No. 87-7 (1987). Based on barebones legislative history for eleven of the twelve states with no-surcharge rules, most state no-surcharge rules appear to be the result of credit card industry lobbying in the 1980s. Nine states adopted their no-surcharge rules in the early 1980s either when it appeared that the federal no-surcharge ban would not be renewed (in 1981) or after it had lapsed (in 1984). Massachusetts enacted its no-surcharge rule in 1981, 1981 Mass. Acts 1167, as did Maine. 1981 Me. Laws, Ch. 243, § 25. Oklahoma updated its no-surcharge rule in 1982 to remove a 5% discount limitation and preclude surcharges. OKLA. STAT. ANN. tit. 14A § 2-211, Okla. cmt. (1996). New York adopted its no-surcharge rule in 1984. 1984 N.Y. Laws 1708. California, which in 1974 adopted a law requiring that merchants have an option of giving cash discounts, 1974 Cal. Stat. 3402, adopted its no-surcharge rule in 1985. 1985 Cal. Stat. 2907. Connecticut adopted its no-surcharge rule in 1986, 1986 Conn. Acts 434 (Reg. Sess.), as did Kansas, 1986 Kan. Sess. Laws 456. Florida's no-surcharge rule dates from 1987, 1987 Fla. Laws 178, as does Minnesota's 5% surcharge limit. 1987 Minn. Laws 360. Three states enacted their laws somewhat later; there is no apparent explanation for the timing. New Hampshire's no-surcharge rule dates to 1992. 1992 N.H. Laws 309. Texas enacted its no-surcharge rule in 1997, 1997 Tex. Gen. Laws 3439, and Colorado enacted its rule in 1999, 1999 Colo. Sess. Laws 1178, then repealed it and reenacted it in a substantially similar form in 2000. 2000 Colo. Sess. Laws 1206. Seven states specifically allow sellers to offer discounts.
56. See CAL. CIV. CODE § 1748.1(e) (Deering Supp. 2004);
57. COLO. REV. STAT. § 5-2-212(2) (2006);
58. CONN. GEN. STAT. § 42-133ff(c) (2007);
59. FLA. STAT. ANN. § 501.0117(1) (West 2006);
60. ME. REV. STAT. ANN. tit. 9-A, § 8-303.3 (Supp. 2006);
61. MD. CODE ANN., COM. LAW § 12-509 (LexisNexis 2005);
62. WYO. STAT. ANN. §§ 40-14-209(b)(v), 40-14-212 (2007).
63. California, Maine, and Washington have also enacted provisions that duplicate the federal Cash Discount Act, 15 U.S.C. § 1666f (2006), in banning card companies from restricting discounts.
64. See CAL. CIV. CODE § 1748.1(e) (Deering Supp. 2007);
65. ME. REV. STAT. ANN. tit. 9-A, §§ 8-103.1.E, 8-303.1 (Supp. 2006);
66. WASH. REV. CODE § 19.52.130 (2006).
67. It is unclear whether it is constitutional for a state to enforce its state surcharge restrictions on interstate credit card transactions. Many of the states that restrict credit surcharges have also made exceptions for government agencies (see FLA. STAT. ANN. § 215.322(3)(b) (West 2006);
68. Op. Tex. Att'y Gen. No. JM-749, at 1, 4-5 (1987)),
69. public utilities (see 2003 ME. P.U.C. LEXIS 455 (2003);
70. but see 2000 CONN. P.U.C. LEXIS 363 (2000) (Connecticut antisurcharge statute applies to public utilities)),
71. and donations or membership dues to religious organizations (see, e.g., Op. Tex. Att'y Gen. No. 96-025 (1996)). Some have also limited the no-surcharge restriction to sales of goods.
72. See, e.g., Op. Tex. Att'y Gen. No. JM-749, at 1, 4-5 (1987).
73. Four states that do not prohibit surcharges have specifically authorized various governmental and quasi-state actors to charge credit surcharges. See ALA. CODE § 41-1-60(e) (2000) (state and local governments may impose a credit surcharge);
74. ALA. CODE § 1 1-47-25(h) (Supp. 2007) (municipalities may impose a credit surcharge);
75. GA. CODE ANN. § 50-1-6(e) (West 2006) (state and local government units may impose a credit surcharge);
76. NEB. REV. STAT. § 81-118.01(6) (2003) (state agencies may impose a surcharge of no more than the cost of the credit transaction);
77. N.C. GEN. STAT. § 159-32.1 (2005) (local governments, public hospitals, and public authorities may impose a credit surcharge).
78. U.S. Census Bureau, Population Estimate 2006, http://www.census.gov/ popest/estimates.php (last visited Oct. 17, 2007).
79. See, e.g., MASTERCARD INT'L, MERCHANT RULES MANUAL, BYLAW 3.11 (2006), available at http://www.mastercard.com/us/wce/PDF/12999_MERC-Entire_Manual.pdf
80. [hereinafter MASTERCARD MERCHANT RULES MANUAL].
81. See, e.g., DISCOVER NETWORK, DISCOVER NETWORK MERCHANT OPERATING REGULATIONS, RULE 3.7 (rev. ed. 2004),
82. [hereinafter DISCOVER NETWORK MERCHANT OPERATING REGULATIONS];
83. MASTERCARD MERCHANT RULES MANUAL, supra note 37, BYLAWS 6.5.1, 9.12.1.
84. See MASTERCARD MERCHANT RULES MANUAL, supra note 37, BYLAW 9.12.2 ("A merchant must not directly or indirectly require any MasterCard cardholder to pay a surcharge or any part of any merchant discount or any contemporaneous finance charge in connection with a MasterCard card transaction. A merchant may provide a discount to its customers for cash payments. A merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used. A surcharge is any fee charged in connection with a MasterCard transaction that is not charged if another payment method is used.");
85. VISA, RULES OF VISA MERCHANTS 10 (2005), available at http://usa.visa.com/download/business/ accepting_visa/ops_risk_management/rules_for_visa_merchants.pdf?it=r4 - %2Fbusiness %2Faccepting_visa%2Fops_risk_management%2Findex.html-Rules for Visa Merchants
86. [hereinafter RULES OF VISA MERCHANTS] .
87. American Express has a piggy-back no-surcharge rule that requires that its card be treated like a MasterCard or Visa. AMERICAN EXPRESS, TERMS AND CONDITIONS FOR AMERICAN EXPRESS CARD ACCEPTANCE (rev. ed. 2001) ("You agree to treat Cardmembers wishing to use the Card the same as you would treat all other customers seeking to use other charge, credit, debit or smart cards or similar cards, services or payment products. You agree not to impose any special restrictions or conditions on the use or acceptance of the Card that are not imposed equally on the use or acceptance of other cards.")
88. See also DISCOVER NETWORK MERCHANT OPERATING REGULATIONS, supra note 38, RULE 3.1 ("Unless otherwise agreed upon by us in writing, you may not impose any surcharge, levy or fee of any kind for any transaction where a Cardmember desires to use a Card for any purchase of goods or services.")
89. Discover has agreed to drop its no-surcharge rule as part of a settlement in merchant-initiated lawsuits. Interchange/Surcharge Update, NILSON REP., Feb. 2006, at 6, 6. It appears, though, that Discover has dropped its no-surcharge rule in name only, as it has agreed to allow merchants to impose a surcharge only if they also impose a surcharge when consumers use other brands of cards.
90. Id. Thus, Discover has only changed its nosurcharge rule from a direct one to one that, like American Express's, piggy-backs on those of MasterCard and Visa. Moreover, because Discover is the cheapest card for merchants to accept, merchants are unlikely to surcharge for Discover and risk steering consumers to more expensive American Express, Visa, and MasterCard transactions.
91. See, e.g., MASTERCARD MERCHANT RULES MANUAL, supra note 37, BYLAW 9.11.1. In the United States, MasterCard and Visa apply the honor-all-cards rule to credit cards and debit cards separately as the result of a settlement with Wal-Mart, Sears, and other retailers in 2003.
92. Id. BYLAW 17.C.2. A merchant may choose to honor all credit cards of the brand, all debit cards of the brand, or both.
93. Id. BYLAW 17.C.3.a. Merchants may not choose to honor only low-interchange rate cards within the brand.
94. See id. Additionally, Connecticut has a statutory "honor-all-cards" rule. CONN. GEN. STAT. § 42-133ff(b) (2007).
95. MASTERCARD MERCHANT RULES MANUAL, supra note 37, BYLAWS 6.5.1, 9.11.1;
96. DISCOVER NETWORK MERCHANT OPERATING REGULATIONS, supra note 38, RULE 13.3.
97. E.g., CAPITAL ONE 2005 ANNUAL REPORT 28 (2005);
98. DISCOVER BANK 2005 ANNUAL REPORT 12 (2005);
99. MBNA 2004 ANNUAL REPORT 42 (2004).
100. Binyamin Appelbaum, Gimmicks Galore in Glut of Credit Cards: Rewards Designed to Woo Fickle Customers, THE CHARLOTTE OBSERVER, June 4, 2006, at ID;
101. Card Debt, CARDTRAK, Apr. 2004, http://www.cardweb.com/cardtrak/pastissues/april2004.html.
102. Damon Darlin, Gift Horses To Consider: Credit Cards That Reward, N.Y. TIMES, Dec. 31, 2005, at C1.
103. Appelbaum, supra note 43;
104. Card Debt, supra note 43.
105. Rewarding Volume, AM. BANKER, Dec. 14, 2006, at 11.
106. Id.
107. Rationally, the increase in consumer spending from using a rewards card instead of a regular card should be de minimis because most cashback rewards programs (the easiest to compare) offer at most a 3% rebate, but typically cap this at around $300 per year. Thus, a rational consumer who never carries a balance would increase annual consumption only up to the amount of the annual rebate, which would typically be the amount of the rebate cap. Such a consumer is chimerical.
108. Moreover, most consumers do not know the APR on their credit cards, so they do not choose credit cards based on APR. As Chart 3, infra, shows, the variation in APR among different types of cards is minimal and does not correspond with the level of rewards. While Platinum (premium rewards) cards have lower APRs on average than Gold (regular rewards) or Standard (no rewards) cards, Gold cards have higher APRs than Standard cards, and the APRs for all types of cards are converging. The difference in APR was never more than 5% (as it was in late 1998), has been less than 3% since 2003, and has been under 1% in 2007. Cardweb.com, CardData, http://www.Cardweb.com/Carddata (subscription database; data PDFs on file with author). It seems unlikely that such small differences in APR would be responsible for different levels of spending.
109. While the mechanics of credit card marketing are opaque, it has been well documented that prime and sub-prime credit markets exist and that people with poor credit receive different types of card offers than those with sterling credit. See, e.g., Freedom Card, Inc. v. JP Morgan Chase & Co., 432 F.3d 463 (3d Cir. 2005) ("reverse confusion" trademark infringement case involving two credit card products using the term "Freedom Card," one marketed toward affluent Wall Street Journal readers, the other marketed to sub-prime African-Americans).
110. Cardweb.com, CardData, supra note 49.
111. Platinum cards were introduced on MasterCard and Visa networks in 1996. Lisa Fickenscher, Amex Sues First USA for Using 'Platinum Card' Name, AM. BANKER, Sept. 23, 1996, at 27. American Express has had a Platinum card product since 1984.
112. David Breitkopf, New 'Pay for Play' Perks from MC for the Wealthy, AM. BANKER, Apr. 12, 2007, at 9.
113. See, e.g., Visa 2006 Interchange Rates, THE GREEN SHEET, Mar. 27, 2006, at 58.
114. Id.
115. Elizabeth Olson, Holding Liev Schrieber's Tony Award? Priceless, N.Y. TIMES, Aug. 13, 2006, at BU7.
116. Darlin, supra note 44, at C1.
117. Robin Sidel, Moving the Market: New Tier on Visa Card to Lift Fees on Merchants, WALL ST. J., MAR. 15, 2007, at C3.
118. Id.
119. Visa U.S.A. Interchange Reimbursement Fees, supra note 22.
120. Arguably, the merchant has avoided a purchase made with an even more expensive American Express card, but this just proves the point: the merchant has no marginal gain from accepting the premium bank card, just as it has no marginal gain from accepting the Amex card.
121. Andrew Ching & Fumiko Hayashi, Payment Card Rewards Programs and Consumer Payment Choice 4 (Fed. Reserve Bank of Kan. City, Working Paper No. 06-02, 2006).
122. Id.
123. Id.
124. Id.
125. Id. at 1.
126. See DISCOVER NETWORK MERCHANT OPERATING REGULATIONS, supra note 38, RULE 3.1;
127. MASTERCARD MERCHANT RULES MANUAL, supra note 37, BYLAWS 3.1, 6.11, 9.11, 9.12;
128. RULES OF VISA MERCHANTS, supra note 39, at 10.
129. DISCOVER NETWORK MERCHANT OPERATING RULES, supra note 38, RULE 3.6;
130. MASTERCARD MERCHANT RULES MANUAL, supra note 37, BYLAW 9.12.3;
131. RULES OF VISA MERCHANTS, supra note 39, at 10.
132. TERRI BRADFORD, PAYMENT TYPES AT THE POINT OF SALE: MERCHANT CONSIDERATIONS 22-23 (2004), available at http://www.kansascityfed.org/PUBLICAT/PSR/ Briefings/ PSR-BriefingDec04.pdf. PIN debit transaction fees are not flat rate, but they are capped at $0.45, which makes them flat rate for most transactions.
133. Id. at 2.
134. 15 U.S.C. §1666f (2004).
135. For a review of the history of merchant restraints see Levitin, Priceless?, supra note 9, at 48-62.
136. See, e.g., Daniel Kahneman & Amos Tversky, Prospect Theory: An Analysis of Decision Under Risk, 47 ECONOMETRICA 263 (1979);
137. Amos Tversky & Daniel Kahneman, The Framing of Decisions and the Psychology of Choice, 211 SCIENCE 453 (1981);
138. Amos Tversky & Daniel Kahneman, Rational Choice and the Framing of Decisions, 59 J. BUS. 251 (1986).
139. See, e.g., Jennifer Arlen, Comment, The Future of Behavioral Economic Analysis of Law, 51 VAND. L. REV. 1765, 1768-69 (1998);
140. Oren Bar-Gill, Seduction by Plastic, 98 NW. U. L. REV. 1373 (2004);
141. Jon D. Hanson & Douglas A. Kysar, Taking Behavioralism Seriously: Some Evidence of Market Manipulation, 112 HARV. L. REV. 1420 (1999);
142. Samuel Issacharoff, Can There Be a Behavioral Law and Economics?, 51 VAND. L. REV. 1729 (1998);
143. Christine Jolls et al., A Behavioral Approach to Law and Economics, 50 STAN. L. REV. 1471 (1998);
144. Richard A. Posner, Rational Choice, Behavioral Economics, and the Law, 50 STAN. L. REV. 1551 (1998).
145. See Bar-Gill, supra note 70.
146. Id. at 1396.
147. For example, Klein et al. provide that "a discount for cash and checks is analytically equivalent to a surcharge for credit" which does not account for the ways that cognitive biases make the two different. See Klein et al., supra note 11, at 619 & n.106.
148. Hanson & Kysar, supra note 70, at 1441.
149. Framing biases first received widespread attention from the work of Amos Tversky and Daniel Kahneman. See Tversky & Kahneman, supra note 69.
150. ITM RESEARCH, THE ABOLITION OF THE NO-DISCRIMINATION RULE, REPORT FOR THE EUROPEAN COMMISSION DIRECTORATE GENERAL COMPETITION 12 (2000), available at http:// europa.eu.int/comm/ competition/anti-trust/cases/29373/studies/netherlands/report.pdf.
151. Id.
152. See Bar-Gill, supra note 70.
153. See Gary B. Nallan et al., Adult Humans Perform Better on Addition than Deletion Problems, 44 PSYCHOL. REC. 489 (1994).
154. Levitin, Priceless?, supra note 9.
155. Truth in Lending Act, Pub. L. No. 90-321, 82 Stat. 146 (1968)
156. (codified at 15 U.S.C. §§ 1601-15 (2006)).
157. Council Directive 98/6, art. 3, 1998 O.J. (L 80) 27, 28 (EC) (directing member states to adopt regulations that require merchants to indicate both selling price and unit price for all covered products).
158. As discussed above, consumers intelligently navigate price differentials in a number of different contexts from coupons to differing sales taxes. There is little reason to assume they would not similarly take advantage of price disclosure in their choice of payment systems.
159. E.g., Klein et al., supra note 11, at 574.
160. EVANS & SCHMALENSEE, supra note 31, at 87, 232 (66% of carded U.S. households have more than one card). AU credit card users must have cash accounts in order to own a credit card. Along with cash, 89% of consumers have direct deposit accounts that they can access with checks, debit cards, and Automatic Clearing House transfers.
161. Brian K. Bucks et al., Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances, FED. RES. BULL., 2006, at A12, available at http://www.federalreserve.gov/ PUBS/oss/oss2/2004/.
162. There are no published data at present indicating that consumers spend more on high interchange credit cards because of the higher interchange rates. If there were such data, one can be sure that the credit card networks would not hesitate to trumpet it in their marketing literature to merchants, in their legal filings in antitrust cases, and in their public relations materials.
163. See THORSTEIN VEBLEN, THE THEORY OF THE LEISURE CLASS (1899) (propounding the concept of conspicuous consumption).
164. If other merchant restraint rules, particularly the no-surcharge rule, were eliminated, the variation among interchange fees would likely be at the low end of the current spectrum or lower, as credit cards would move to cost-plus commoditized pricing.
165. See Levitin, Priceless?, supra note 9.
166. See Marc Hochstein, GMAC: Many Rewards Aren't Used, AM. BANKER, Dec. 11, 2006, at 7.
167. See, e.g., Gerri Willis, The Right Reward Card for You, CNN/MONEY, May 19, 2004, http://money.cnn.com/2004/05/19/pf/saving/ willis_tips/.
168. Press Release, Capital One, New Capital One Rewards Card Provides Cash Back, No Hassles (Feb. 27, 2007), http://phx.corporate-ir.net/phoenix.zhtml?c= 70667&p=irol-newsArticle2&ID=967565 (citing consumer surveys showing that "nearly 40 percent of respondents did not know that many cash reward programs limit the number of rewards earned, and more than 30 percent of respondents did not realize that their cash back rewards could expire").
169. See supra note 42 and accompanying text.
170. Timothy H. Hannan et al., To Surcharge or Not to Surcharge: An Empirical Investigation of ATM Pricing, 85 REV. ECON. & STAT. 990 (2003).
171. Herb Weisbaum, How To Avoid Getting Socked With Extra Fees, MSNBC, July 17, 2006, http://www.msnbc.msn.com/id/13905579/. Special thanks to Phil Frickey for bringing ARCO debit surcharges to my attention.
172. Adam J. Levitin, The Antitrust Super Bowl: America's Payment Systems, No-Surcharge Rules, and Hidden Costs of Credit, 3 BERKELEY BUS. L.J. 265, 310 (2005).
173. InfoChoice, Credit Card Surcharging More Common (Sept. 4, 2006), http://www.infochoice.com.au/banking/news/creditcards/06/09/article15501.asp;
174. East & Partners, Ltd., Almost One Half of Australian Merchants Set To Surcharge (Aug. 1, 2005), http://www.east. com.au/bankingnews.asp?id= 1314.
175. See Levitin, Priceless?, supra note 9.
176. See id.
177. See id.
178. See, e.g., SUJIT CHAKRAVORTI & WILLIAM R. EMMONS, FED. RES. BANK OF CHI., Who Pays for Credit Cards 21 (2001), available at http://www.chicagofed.org/publications/publIicpolicystudies/ emergingpayments/pdf/eps-2001-1.pdf.;
179. William C. Dunkelberg & Robert H. Smiley, Subsidies in the Use of Revolving Credit, J. MONEY CREDIT & BANKING, Nov. 1975, at 469, 471;
180. Alan S. Frankel, Monopoly and Competition in the Supply and Exchange of Money, 66 ANTITRUST L.J. 313 (1998);
181. Alan S. Frankel & Allan L. Shampine, The Economic Effects of Interchange Fees, 73 ANTITRUST L.J. 627, 632-35 (2006) (Frankel and Shampine note the cross-subsidy, but not its regressive nature);
182. MICHAEL L. KATZ, RESERVE BANK OF AUSTRALIA, REFORM OF CREDIT CARD SCHEMES IN AUSTRALIA II: COMMISSIONED REPORT 39-40 (2001).
183. See Levitin, Priceless?, supra note 9.
184. See id.
185. See id.
186. See John M. Barron et al., Discounts for Cash in Retail Gasoline Marketing, CONTEMP. POL'Y ISSUES, Oct. 1992, at 89, 94-97.
187. Id. at 89.
188. Id.
189. See id. at 89, 96.
190. Id. at 96.
191. Id. at 95, 102.
192. See Chart 4, which illustrates this subsidization of credit card consumers by merchants.
193. See Chart 4, which illustrates this subsidization of credit card consumers by cash consumers.
194. See Barron et al., supra note 105, at 95-96, 102.
195. Id. at 89, 96.
196. Id. at 96.
197. Id. at 95, 102.
198. See Chart 5, which illustrates this subsidization of credit card consumers by merchants.
199. See Chart 5, which illustrates this subsidization of credit card consumers by cash consumers.
200. See Barron et al., supra note 105, at 96.
201. Id. at 89, 96.
202. The percentage was calculated by dividing 1.82¢ (the subsidization of credit card consumers by cash consumers at Delaware stations with unified pricing) by $1.19 (the price of gasoline per gallon at Delaware stations with unified pricing).
203. The percentage was calculated by dividing 2.37¢ (the discount that credit card consumers received at Delaware stations with unified pricing) by $1.22 (the cost of gasoline per gallon for credit purchases at Delaware stations with two-tiered pricing).
204. The percentage was calculated by dividing 1.480 (the subsidization of credit card consumers by cash consumers at Washington stations with unified pricing) by $1.11 (the price of gasoline per gallon at Delaware stations with unified pricing).
205. The percentage was calculated by dividing 3.38¢ (the discount that credit card consumers received at Washington stations with unified pricing) by $1.14 (the cost of gasoline per gallon for credit purchases at Washington stations with two-tiered pricing).
206. See Barron et al., supra note 105, at 96, 102.
207. F.T.C., GASOLINE PRICE CHANGES: THE DYNAMICS OF SUPPLY, DEMAND, AND COMPETITION 8-9 (2005), http://www.ftc.gov/reports/gasprices05/050705gaspricesrpt.pdf.
208. Peter Lewis, Rising Gas Prices Are Driving Many of Us to Extremes, SEATTLE TIMES, May 23, 2004, at Al.
209. STEVE MOTT, BETTERBUYDESIGN, THE CHALLENGE OF BANK CARD INTERCHANGE 18 (2005), http://www.betterbuydesign.com/articles/ The%20Challenge%20of%20Interchange-Mott-Dec-2005.ppt (showing consumer use of credit cards for borrowing increased in the 1980s before becoming flat in the 1990s).
210. See, e.g., NILSON REP., Dec. 2006;
211. NILSON REP., Dec. 2005;
212. NILSON REP., Dec. 2004;
213. NILSON REP., Nov. 2003;
214. NILSON REP., Sept. 2002;
215. NILSON REP., Apr. 2002;
216. NILSON REP., Dec. 2001;
217. NILSON REP., Dec. 2000.
218. Accordingly, the argument by Benjamin Klein et al. that we should not be concerned about cross-subsidization of MasterCard and Visa users by cash users because there will still be cross-subsidization of American Express and Discover users does not address the point. This is because it frames the issue in terms of inter-network competition, not inter - paymentsystem competition. See Klein et al., supra note 11, at 614-17. The problem is not crosssubsidization of users of particular networks, but cross-subsidization of all credit card users by non-card users.
219. See Richard A. Epstein, Australian Fine-Tuning Gone Awry, 2005 COLUM. BUS. L. REV. 551, 570 (2005) for an example of an argument that cross-subsidization does not matter because it occurs throughout the economy. ("In a competitive marketplace, there is no reason whatsoever to regulate the pricing structure of these charge cards any more than there is to regulate the price of pajamas or alarm clocks. After all, reductions in the price of pajamas are said to create an implicit cross-subsidy from purchasers of alarm clocks to those of pajamas because of an implicit shift of some joint costs from the former to the latter.").
220. I am indebted to Sasha Volokh for this salad bar analogy.
221. Klein et al., supra note 11, at 618. Richard Epstein acknowledges, in contrast, that the cross-subsidies exist, but contends that they are unimportant because they tend to be small. He does not address the regressive nature of the cross-subsidy, nor does he address the cumulative magnitude of the cross-subsidy.
222. See Epstein, supra note 131, at 579.
223. Klein et al., supra note 11, at 618.
224. Id. at 619.
225. See Dunkelberg & Smiley, supra note 101, at 471. The authors note, in passing, the regressive nature of the cross-subsidy from cash users to credit users, but do not attempt to show this cross-subsidy empirically.
226. See Burney Simpson, Merchants Tackle Credit Card Fee Policies, CARD & PAYMENTS, Jan. 2006, at 28, 32.
227. See FEDERAL RESERVE BOARD, SURVEY OF CONSUMER FINANCE (2004).
228. The particularized nature of certain stores' clientele might make the cross-subsidy less regressive. Customers at upscale boutiques can typically pay in any payment form they wish; therefore there is no forced cross-subsidy. Similarly, stores in poor neighborhoods tend to do a high percentage of their transactions in cash; the total costs of accepting credit cards might not be high enough for the merchant to pass some of it on to consumers. There remain, however, plenty of merchants (such as gas stations and convenience stores) who are patronized by consumers from all walks of life.
229. Bucks et al., supra note 85, at All (see Table 5). This Article defines "banked" as having a transaction account.
230. Id.
231. Id.
232. Id.
233. See DAVID CAPLOVITZ, THE POOR PAY MORE (1967).
234. See I.R.S. Announcement 2002-18, 2002-1 C.B. 621. Although the Announcement only deals with frequent flier miles gained from business travel, the IRS has not pursued an enforcement program against personal frequent flier miles either. The IRS has not indicated
235. that it considers frequent flier miles to be subject to the air travel tax of 26 U S C § 4261 (2006).
236. See I.R.S. Priv. Ltr. Rul. 2004-25-047 (Feb. 23, 2004). Canada, however, does tax frequent flier miles accumulated by an employee into his own account from business travel as income. Griffen v. Canada, [1995] 2 C.T.C. 2767 (Can.).
237. See Bar-Gill, supra note 70, at 1383, n.43.
238. There's Supersize Potential in Cashless Fast Food, THE GREEN SHEET, Dec. 23, 2002, at 16, 18, http://www.greensheet. com/gsonline_pdfs/021202.pdf.
239. Michael J. Marando, Credit or Debit? Consumers's Card Choice Can Take a Swipe at Retailers' Profits, PROSPER MAG., Feb. 2005, available at http://www.prospermag.com/go/prosper/archives/ past_issues_2005/february_2005/special_report credit_or_debit/index.cfm
240. Id.
241. Id.
242. STAR NETWORKS, INC., 2005/2006 CONSUMER PAYMENTS USAGE STUDY 2 (2006), http://www.firstdata. com/pdf/ConsPmtUsageBrief6_06.pdf.
243. Drazen Prelec & Duncan Simester, Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay, 12 MARKETING LETTERS 5, 11 (2001).
244. Id.
245. Id.
246. Richard A. Feinberg, Credit Cards as Spending Facilitating Stimuli: A Conditioning Interpretation, 13 J. CONSUMER RES. 348 (1986).
247. Joydeep Srivastava & Privay Raghubir, Debiasing Using Decomposition: The Case of Memory-Based Credit Card Expense Estimates, 12 J. CONSUMER PSYCHOL. 253 (2002).
248. Dilip Soman & Amar Cheema, The Effect of Credit on Spending Decisions: The Role of the Credit Limit and Credibility, 21 MARKETING SCI. 32 (2002).
249. See generally Daniel Kahneman et al., Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias, 5 J. ECON. PERSP. 193 (1991);
250. Daniel Kahneman et al., Experimental Tests of the Endowment Effect and the Coase Theorem, 98 J. POL. ECON. 1325 (1990);
251. Richard Thaler, Toward a Positive Theory of Consumer Choice, 1 J. ECON. BEHAV. & ORG. 39 (1980).
252. Srivastava & Raghubir, supra note 156.
253. Merchant Processing Fees, supra note 4, at 1, 7.
254. See also Lee Manfred, The Kansas City Fed Conference: Another Skirmish in the Interchange Controversy, First Annapolis Navigator, May 2005, available at http://firstannapolis.com/get_navigator.cfm? navigator_id=44.
255. See Merchant Processing Fees, supra note 4. Interchange revenue for MasterCard and Visa issuers increased 74% during the same period.
256. See also James J. Daly, Tenuous Gains in Card Profitability, CREDIT CARD MGMT., May 2001, at 32, 33;
257. Jeffrey Green, Exclusive Bankcard Profitability 2007 Study & Annual Report, CARDS & PAYMENTS, May 2007, at 26, 27.
258. Levitin, Payment Wars, supra note 3, at 451.
259. When the Cash Discount Act was first enacted in 1974, there were only three payment options available for consumers: cash, check, or credit. The Cash Discount Act was silent as to checks. See Cash Discount Act, Pub. L. No. 93-495, § 167, 88 Stat. 1500, 1515 (1974). It could be argued that checks and especially debit are roughly equivalent to cash, so the Cash Discount Act should apply to those payment systems, too, but there is no authority on the issue.
260. See, e.g., Stefano DellaVigna & Ulrike Malmendier, Paying Not to Go to the Gym, 96 AM. ECON. REV. 694, 695 (2006) (finding that consumers overestimate their future gym usage by 70%).
261. See Bar-Gill, supra note 70, at 1375-76.
262. See id. at 1395-97. Query whether consumers even read the Truth in Information Act disclosures, much less understand them, and whether one can know one's actual interest rate on a credit card with cross-default clauses.
263. See id. at 1400.
264. See id. at 1400-01.
265. Victor Stango & Jonathan Zinman, How a Cognitive Bias Shapes Competition: Evidence from Consumer Credit Markets (working paper), available at https://www.dartmouth.edu/~jzinman/Papers/ Stango&Zinman_CognitiveBias&Competition.pdf.
266. See Card Debt, supra note 43.
267. See id.
268. See id.
269. See Allen C. Grommet, Economic Analysis, CAMBRIDGE CONSUMER CREDIT INDEX, May 6, 2005, at 4, available at http://www.cardweb.com/carddata (subscription data service; PDFs on file with author).
270. Id.
271. Id.
272. See Card Debt, supra note 43. Discover's Motiva card, introduced in 2007, pushes the underestimation bias a step further with a predatory rewards program designed to take advantage of consumers with poor cognitive abilities. The Motiva card gives rewards to consumers - but only if they revolve a balance.
273. See Discover Card, Pay-On-Time Bonus Frequently Asked Questions, http://www.discovercard.com/apply/motiva/faq.shtml (last visited Oct. 5, 2007). The card is thus marketed on what is inherently a bad economic proposition, as the value of the rewards does not offset additional interest costs.
274. See generally Bar-Gill, supra note 70.
275. See, e.g., ROBERT D. MANNING, CREDIT CARD NATION: THE CONSEQUENCES OF AMERICA'S ADDICTION TO CREDIT (2000);
276. TERESA A. SULLIVAN ET AL., THE FRAGILE MIDDLE CLASS: AMERICANS IN DEBT (2000);
277. ELIZABETH WARREN & AMELIA WARREN TYAGI, THE TWO-INCOME TRAP: WHY MIDDLE-CLASS MOTHERS AND FATHERS ARE GOING BROKE (2003);
278. Bar-Gill, supra note 70.
279. Bd. of Governors of the Fed. Reserve Sys., Fed. Reserve Statistical Release G.19: Consumer Credit Historical Data, http://www.federalreserve.gov/ releases/g19/hist/cc_hist_sa.txt (last visited Oct. 5, 2007) (seasonally adjusted). These numbers include all revolving consumer credit, not just credit cards, but credit cards make up nearly all revolving consumer credit.
280. See Mark Furletti & Christopher Ody, Measuring U.S. Credit Card Borrowing: An Analysis of the G. 19's Estimate of Consumer Revolving Credit 24 (Apr. 2006) (Fed. Res. Bank of Phila. Discussion Paper), available at http://www.philadelphiafed.org/pcc/papers/2006/DG192006April 10.pdf.
281. See Bd. of Governors of the Fed. Reserve Sys., supra note 179 (including in the comparison the recent spectacular growth in non-revolving home mortgage and home equity loan debt).
282. See id.;
283. U.S. Census Bureau Data, Monthly Postcensal Resident Population By Single Year of Age 2006, http://www.census.gov/popest/national/asrh/files/NC-EST2006- ALLDATA-R-File14.dat (last visited Nov. 14, 2007);
284. U.S. Bureau of Labor Statistics Data, Inflation Calculator, http://data.bls.gov/cgi-bin/cpicalc.pl (calculating that inflation from 1976 to 2006 was 354.3067%).
285. Card Debt, CARDTRAK, June 1, 2007, http://www.cardtrak.eom/news/2007/6/1/Card_ Debt. An alternative metric of the credit card debt burden per carded household was $8,467 in 2006. CardWeb.com, Bank Credit Card Annual Revolving Balances Per Carded Households (last visited Sep. 28, 2007) (on file with author).
286. RONALD J. MANN, CHARGING AHEAD: THE GROWTH AND REGULATION OF PAYMENT CARD MARKETS 52 (2006).
287. Bd. of Governors of the Fed. Reserve Sys., supra note 179.
288. Timothy J. Muris, Payment Card Regulation and the (Misapplication of the Economics of Two-Sided Markets, 2005 COLUM. BUS. L. REV. 515, 528 (2005).
289. Todd J. Zywicki, Economics of Credit Cards, 3 CHAP. L. REV. 79, 98 (2000).
290. See Chart 6.
291. See Bd. of Governors of the Fed. Reserve Sys., supra note 179.
292. See id.
293. See Randi F. Marshall & Tami Luhby, How Long Before the Debt Bubble Bursts?, NEWSDAY, Dec. 11, 2005, at A68.
294. See WARREN & WARREN TYAGI, supra note 178, at 113;
295. see also Steve Lohr, Maybe It's Not All Your Fault, N.Y. TIMES, Dec. 5, 2004, § 4, at 1.
296. MANN, supra note 183, at 49 (describing credit card usage in Germany).
297. Cass R. Sunstein & Richard H. Thaler, Libertarian Paternalism is Not an Oxymoron, 70 U. CHI. L. REV. 1159, 1162 (2003).
298. Press Release, Public Agenda, Increased Anxiety Over Retirement and Social Security but Americans Continue to Spend, Not Save (May 20, 1997), http://www.publicagenda.org/press/press_release_detail.cfm?report-title= Miles%20to%20Go.
299. Personal Savings Drop to a 73-Year Low, MSNBC, Feb. 1, 2007, http://www.msnbc.msn.com/id/16922582/.
300. See MILT MARQUIS, FED. RESERVE BANK S.F., WHAT'S BEHIND THE LOW U.S. PERSONAL SAVING RATE? 1 (2002), available at http://www.frbsf.org/publications/economics/ letter/2002/el2002-09.pdf (discussing NIPA).
301. See Ronald T. Wilcox, Reinventing Thrift: How Americans Save, Why They Don't and What to Do About It (unpublished manuscript, on file with author) (discussing FOF measure)
302. See id. at 7.
303. See id. at 6-7.
304. Personal Savings, supra note 195.
305. See Bureau of Econ. Analysis, Nat'l Econ. Accounts, http://bea.gov/national/nipaweb/SelectTable.asp (last visited Oct. 17, 2007). Data are from Table 2.1: Personal Income and Its Disposition.
306. See Bd. of Governors of the Fed. Reserve Sys., Fed. Reserve Statistical Release Z.1: Flow of Funds Accounts of the U.S. (Sept. 17, 2007), http://www.federalreserve.gov/releases/z1/current/annuals/a1995-2006.pdf. Data are from Table F.10: Derivation of Measures of Personal Savings.
307. Wilcox, supra note 197, at 9.
308. See Bd. of Governors, supra note 202.
309. Data are from Table F. 10: Derivation of Measures of Personal Savings; Bureau of Econ. Analysis, supra note 201.
310. Marquis, supra note 196, at 2.
311. Id. at 3.
312. Id.
313. Sujit Chakravorti & Ted To, A Theory of Credit Cards 15 (Fed. Reserve Bank of Chi., Working Paper No. 1999-16, 2003), available at http://www.chicagofed.org/publications/workingpapers/papers/wp99_16.pdf.
314. MICHAEL L. KATZ, RESERVE BANK OF AUSTL., REFORM OF CREDIT CARD SCHEMES IN AUSTRALIA II: COMMISSIONED REPORT 39 (2001), available at http://www.rba.gov.au/PaymentsSystem/Reforms/CCSchemes/ IICommissionedReport/2_commissioned_report.pdf.
315. Wilcox, supra note 197, at 11.
316. Because of the low land to population ratio and various cultural factors, an unusually high proportion of Irish wealth is invested in non-mortgaged land, which does not produce much income. This has made Irish society very inflation conscious.
317. Stamp Duties Consolidation Act of 1999 (Act No. 31/1999) (Ir.) §§ 123-24 (as amended by subsequent Acts up to and including the Finance Act of 2006), available at http://www.revenue.ie/pdf/ sdutynotesup05.pdf (last visited Oct. 5, 2007) (imposing €40 annual duty on credit cards, compared with €10 annual duty for debit and ATM cards).
318. See MANN, supra note 183, at 3;
319. SULLIVAN ET AL., supra note 178, at 129 ("As the fastest growing proportion of consumer debt, credit card debt has led the way to bankruptcy for an increasing number of Americans."). The relationship between credit card debt and bankruptcy has been questioned by Judge Edith Hollan Jones and Todd J. Zywicki.
320. See Edith H. Jones & Todd J. Zywicki, It's Time for Means-Testing, 1999 BYU L. REV. 177, 224-28 (1998);
321. Todd J. Zywicki, The Economics of Credit Cards, 3 CHAP. L. REV. 79, 81-83 (2000);
322. but see MANN, supra note 183, at 53 (critiquing Zywicki's position).
323. MANN, supra note 183, at 66-67.
324. See id. at 64-67.
325. See, e.g., WARREN & WARREN TYAGI, supra note 178, at 112.
326. Marshall & Luhby, supra note 190.
327. RESERVE BANK OF AUSTL., THE SETTING OF WHOLESALE ("INTERCHANGE") FEES IN THE DESIGNATED CREDIT CARD SCHEMES (2005), available at http://www.rba.gov.au/ MediaReleases/2006/Pdf/mr_06_02_creditcard_standard.pdf. The RBA reforms were the first step in an international movement to regulate credit card networks.
328. See Levitin, Payment Wars, supra note 3, at 462 (listing other international developments);
329. see also Pierre V.F. Bos, International Scrutiny of Payment Card Systems, 73 ANTITRUST L.J. 739 (2006) (providing an overview of Australian and select European regulatory actions).
330. RESERVE BANK OF AUSTL., supra note 218.
331. RESERVE BANK OF AUSTL., DEBIT AND CREDIT CARD SCHEMES IN AUSTRALIA: A STUDY OF INTERCHANGE FEES AND ACCESS 43 (2000), available at http://www.rba.gov.au/ PaymentsSystem/Publications/ PaymentsInAustralia/interchange_fees_study.pdf (providing 0.95% average interchange fee in 1999);
332. Press Release, Reserve Bank of Austl., Credit Card Benchmark Calculation (Sept. 29, 2006), available at http://www.rba.gov.au/MediaReleases/ 2006/Pdf/mr_06_08_benchmark_calc_credit_card.pdf (setting the cost-based interchange rate to 0.5% from its previous level of 0.55%).
333. See Reserve Bank of Austl., Bulletin Statistical Tables (Sept. 12, 2007), http://www.rba.gov.au/Statistics/Bulletin/. Data are from Table C3: Merchant Fees for Credit and Charge Cards.
334. Total merchant fees on MasterCard and Visa have declined from 1.45% of purchase price in March 2003 to 0.91% of purchase price in March 2007. Id.
335. See VISA INTERNATIONAL, SUPPLEMENTARY SUBMISSION TO THE HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS, FINANCE, AND PUBLIC ADMINISTRATION 14 (2006), available at http://www.aph.gov.au/house/committee/efpa/rba2005/subs/sub023.pdf.
336. Philip Lowe, Assistant Governor (Financial System), Reserve Bank of Austl., Statement to Australian House of Representatives Standing Committee on Economics, Finance and Public Administration regarding the Australian Payments System 22 (May 15, 2006), available at http://www.rba.gov.au/ publicationsandresearch/bulletin/bu_jun06/pdf/bu_0606_3.pdf.
337. Id.
338. Id. at 20.
339. See Reserve Bank of Austl., supra note 221. Data are from Table C1: Reserve Credit and Charge Card Statistics and Table C4: Debit Card Statistics. The high growth rate of debit cards in the late 1990s is attributable to their introduction into the Australian market at relatively the same time.
340. See id. (using data from both tables).
341. See Barron et al., supra note 105.
342. Chart 11 displays savings as a percentage of total disposable income. See Reserve Bank of Austl., supra note 221. Data are from Table G12: Gross Domestic Product-Income Components.
343. See In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 398 F. Supp. 2d 1356 (J.P.M.L. 2005) (consolidating suits in E.D.N.Y.);
344. see also Kendall v. Visa U.S.A., Inc., No. C 04-04276 JSW, 2005 U.S. DIST. LEXIS 21450 (N.D. Cal. July 25, 2005).
345. Credit Card Interchange Rates: Antitrust Concerns? Hearing Before the S. Judiciary Comm., 109th Cong. 147 (2006) [hereinafter Hearings] (statement of Timothy J. Muris, former FTC Chairman).
346. See supra note 39.
347. Consumer antitrust suits (either state or federal) are likely to face standing problems. See Levitin, supra note 9.
348. What's at Stake, supra note 15, at 70 (statement of Stuart E. Weiner, Vice President and Director of Payment System Research of the Federal Reserve Bank of Kansas City).
349. See also James M. Lyon, The Interchange Fee Debate: Issues and Economics, THE REGION, June 2006, at 39, available at http://www.minneapolisfed.org/pubs/region/06-06/interchange.cfm (quoting a letter from Federal Reserve Board Chairman Alan Greenspan to Congress: "The Board's regulatory authority does not currently encompass regulating the interchange fees established by payments networks.").
350. See Hearings, supra note 231, at 147.
351. FLA. STAT. § 501.0117 (2004).
352. See, e.g., 80(R) HB 1236 (Tex. 2007) (proposing a limited exception to state no-surcharge law that would permit a surcharge of no more than $1 on transactions under $10, including the surcharge, upon pre-sale disclosure).
353. See, e.g., Elizabeth Warren, The Phantom $400, 13 J. BANKR. L. & PRAC. 77 (2004);
354. see also Jonathan Alter, A Bankrupt Way to Do Business, NEWSWEEK, Apr. 25, 2005 ("History should remember the 109th as the Credit Card Congress.").
355. See Americans for Consumer Educ. and Competition, About ACEC, http://www.todaysmoneymatters.org/about/acec/ (last visited Oct. 5, 2007).
356. See Press Release, Americans for Consumer Educ. and Competition, Nat'l Consumer Group Warns Latest Merchant Lawsuit Against Credit Card Companies Poses Veiled Attempt to Pass Additional Costs onto Consumers (June 27, 2005), http://www.todaysmoneymatters.org/pressroom/062405/. ACEC seems to conflate "consumers" with "credit card consumers."
357. See Lowe, supra note 223.
358. See Americans for Consumer Educ. and Competition, supra note 239.
359. Adam J. Levitin, The Antitrust Superbowl: America's Payment Systems, No-Surcharge Rules, and the Hidden Costs of Credit, 3 BERK. BUS. L.J. 265, 291-92 (2005).
360. See Robert E. Litan & Alex J. Pollock, The Future of Charge Card Networks 31-33 (AEI-Brookings Joint Ctr. for Regulatory Studies, Working Paper No. 06-03, 2006) for discussion of a possible nationalization of payment systems.
361. See, e.g., THE FEDERALIST NO. 44 (James Madison) (arguing for the importance of federal government control over currency).