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Amendment that may limit credit card debt use could hurt merchants
By Oscar Monfort on Jun 5th, 2010
An amendment to the Senate's financial reform bill is intended to help merchants regarding interchange fees, although a recent study shows it could end up hurting businesses based on how consumers react.
According to Lightspeed Research, 53 percent of respondents to a survey said they would shop less at certain stores if those merchants used the limitations provided to them by Senator Dick Durbin's amendment. Through the change to financial reform, merchants will be able to set minimum amounts for credit or debit card purchases, while also being allowed to give discounts to people who pay in cash.
Furthermore, more than two-thirds of respondents said they are against the thought of not being able to use plastic in order to make smaller purchases.
Interchange fees are charged by companies like MasterCard and Visa to merchants for the ability to accept cards for payments. However, merchants say that they end up losing money on smaller transactions as a result, which leads to higher prices for consumers.
Other reforms included in the Senate's bill include creating a new consumer protection bureau in the Federal Reserve System. This organization would watch over products, such as those tied to credit card debt.
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