2011支持“杜宾修订”规范借记卡交换费的经济分析

Electronic copy available at: http://ssrn.com/abstract=1843628 Economic Analysis of Claims in Support of the “Durbin Amendment” to Regulate Debit Card Interchange Fees By David S. Evans, Howard H. Chang, and Margaret Weichert* May 12, 2011 Abstract Section 1075 of the 2010 Dodd-Frank Act requires the Federal Reserve Board to regulate the debit card industry including the interchange fee banks and credit unions receive from merchants. This paper reviews the arguments in support of this regulation put forward by Senator Durbin, who proposed the amendment that led to Section 1075, large retailers, and merchant trade associations. Contrary to their claims, the leading government entities that have examined interchange fees specifically reject the approach taken by the Durbin Amendment; no US antitrust authority or court has found that MasterCard or Visa have engaged in price fixing with regard to debit interchange fees; debit card interchange fees have not increased materially over time in the US; Canadians have not benefitted from zero debit interchange fees in that country since they pay more for using cards, and retail banking accounts, than Americans and since Canadians cannot use their zero-interchange fee debit cards to pay online or internationally; and consumers and small businesses will not benefit from the planned reductions in interchange fees, in fact they will lose hundreds of millions of dollars a year. * Evans is Chairman of Global Economics Group, Lecturer at University of Chicago Law School, and Visiting Professor at University College London; Chang is a Principal with Global Economics Group; and Weichert is a Principal at Market Platform Dynamics. The authors would like to thank Visa Inc. for funding the research and writing for this paper. The views expressed in this paper are our own and do not necessarily reflect those of Visa or any organization with which the authors are affiliated. Electronic copy available at: http://ssrn.com/abstract=1843628 2 of 31 I. Introduction and Summary This paper examines the economic rationales for the imposition of price controls on the debit card industry. Over the last several decades Congress has overturned laws that resulted in price controls in industries ranging from airlines to trucking.1 It was widely recognized that government price setting causes more problems than it corrects. Consumers have benefited from lower prices, greater choice, and more competition as a result of the elimination of these controls.2 Bucking this trend, the U.S. Senate adopted the Durbin Amendment to the Dodd-Frank Act in 2010.3 The final legislation included a seven-page section that requires the Federal Reserve Board to regulate the prices that banks and credit unions that issue debit cards to their checking account customers can receive from merchants when those customers pay merchants with these cards.4 This so-called “interchange fee” is established by payment card systems such as Visa, MasterCard, Star, Pulse, and others that manage the networks that ultimately move money between merchants and cardholders.5 Interchange fees have been a major source of revenue for banks and credit unions for providing debit cards.6 1 Clifford Winston (1998), “U.S. Industry Adjustment to Economic Deregulation,” Journal of Economic Perspectives, 12:3, pp. 89 – 110 (“Winston 1998”). 2 See Winston 1998. 3 “US Senate Lawmakers Approve Durbin Interchange Amendment,” Dow Jones Capital Markets Report, May 13, 2010 4 See Sec. 1075 Reasonable Fees and Rules for Payment Card Transactions, from H.R.4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act. Available at http://www.opencongress.org/bill/111-h4173/text . 5 We adopt the oversimplified terminology used by proponents of the Durbin amendment that merchants pay interchange fees to issuers. In fact, merchants contract with acquirers to provide them with card services at specified prices and conditions. Payment card systems typically require merchant acquirers to pay an 3 of 31 The Government Accountability Office (“GAO”), Congress’s investigative arm, and the Federal Reserve Board staff conducted studies of interchange fee regulations during 2009.7 Both reports expressed strong reservations about price regulations. In addition, the U.S. Department of Justice stated that it was opposed to regulation of interchange fees and that attempts to legislate lower credit card interchange fees may harm consumers.8 Although Congress had held hearings on various aspects of credit card interchange fees, there were no hearings concerning the proposal to impose price controls on debit cards and relatively little discussion of the proposal. As a result, there are two primary sources of explanations of the economic rationales for regulation of the debit card industry. First, there are the statements by Senator Durbin and other congressional proponents of the legislation that were made during the abbreviated Senate floor discussion and in other venues prior to passage of the bill. Senator Durbin, in particular, has been a vocal defender of the law in the months after its adoption. Second, the Federal Reserve Board established a rulemaking procedure for interchange fee to a card issuer when a consumer uses a card from that issuer to pay a merchant serviced by the acquirer. It is then up to the merchant acquirer to determine the extent to which it will seek to recover the costs of those interchange fees from the merchants. The largest merchants typically have contracts that specify that they pay the acquirer the applicable interchange fees, which can vary by transaction, plus additional fees for processing and other services (“interchange fee plus” contracts). Smaller merchants typically pay a “blended fee” that is the same for all cards (debit, credit, and prepaid) used at the merchant regardless of the applicable interchange fee on each transaction. 6 So-called “three party” systems such as American Express and Discover charge a merchant discount that accounts for their role combined role as merchant acquirer and network and earn a considerable portion of their revenue from these merchant discounts. In recent years, these 3-party have also permitted financial institutions to issue cards in their systems (including, for Discover, signature debit cards) and to, in effect, share a portion of the merchant discounts with them. 7 See “Credit Cards: Rising Interchange Fees Have Increased Costs for Merchants, but Options for Reducing Fees Pose Challenges,” United States Government Accountability Office, November 2009 (“GAO 2009”) and Robin A. Prager, Mark D. Manuszak, Elizabeth K. Kiser, and Ron Borzekowski (2009). “Interchange Fees and Payment Card Networks: Economic, Industry Development, and Policy Issues,” Federal Reserve Finance and Economics Discussion Paper, 2009-23 (“Prager et al.”). 8 Letter dated June 23, 2008 from the U.S. Department of Justice to Congressman Lamar Smith, available at http://www.electronicpaymentscoalition.org/downloads/letter_DOJ.pdf (“DOJ June 2008 Letter”). 4 of 31 developing its regulations, during which trade groups representing merchants have submitted comments that articulate the rationales they see for the price controls. A review of these statements finds that the proponents of debit interchange fee regulations have advanced several major justifications for government intervention.9 The trade associations and their supporters in Congress claim that: • MasterCard and Visa have engaged in price fixing in violation of the antitrust laws. • Interchange fees have increased over time, resulting in merchants incurring costs that force them to increase prices to consumers. • Canada and some other countries have zero interchange fees on domestic debit cards so that the merchant does not pay anything to the cardholder’s bank when she swipes. • Consumers would save more than $1 billion a month from reduced prices if merchants did not have to pay these fees, and small businesses, in particular, would benefit if they did not have to pay interchange fees. Upon close review, we find that these claims are not supported by serious evidence or analysis, are factually incorrect, or are misleading.10 • Despite knowing that payment card systems have been setting interchange fees for four decades, no U.S. antitrust authority has ever charged these systems with 9 See below for citations for these claims. 10 See below for discussion and support. 5 of 31 price fixing violations of the antitrust laws. The courts have in fact rejected that allegation thus far. • It is not true that the interchange fee rates established by card systems have increased materially over time. As documented by Federal Reserve Board economists, the rates that merchants pay when cardholders swipe have been roughly steady for most payment card networks for the last six years; in fact the average debit card interchange fee has declined over the last decade. • It is true that Canadian merchants generally pay a zero interchange fee for debit cards, but what has been left unsaid by the price control proponents is that Canadian consumers pay more and get less for their debit cards than American consumers. Canadians effectively cannot use their debit cards to make purchases over the Internet, and they pay higher fees for using their cards and for checking account services in general, compared to American consumers. • The claim that consumers will benefit ignores the likelihood that merchants will not pass along what are penny cost savings for the typical products they sell fully or quickly to consumers. One large merchant has acknowledged the business reality that these cost savings will go to its bottom line. • Most small businesses do not accept debit cards and will not benefit from the price controls. They will in fact be harmed because their checking account fees will go up. 6 of 31 II. Debit Card Price Fixing and Anticompetitive Practices According to Senator Durbin, “This system of price-fixing by Visa and MasterCard on behalf of thousands of banks has gone entirely unregulated.”11 The Merchants Payments Coalition, represented by the law firm of Constantine Cannon, claims that “Visa and MasterCard conspired with their members to fix prices and leverage their power in the credit card market to dominate the debit market.”12 One of the economists retained by the merchants has stated that MasterCard and Visa have monopoly power over merchants, which have no choice but to accept cards.13 A. The View of U.S. Antitrust Authorities and Other Regulators These are serious allegations. Price fixing is subject to criminal penalties under Section 1 of the Sherman Act. Monopolistic practices are unlawful under Section 2 of the Sherman Act. The U.S. Department of Justice is responsible for taking companies that engage in these practices to court. The Federal Trade Commission also has the power to attack price fixing and monopolistic practices. The U.S. Department of Justice and Federal Trade Commission have scrutinized the practices of the payment card systems for about four decades. They have known during this period of time that all of the four-party payment card systems were setting interchange fees. 11 Senator Durbin’s April 12, 2011 Letter to Jamie Dimon. 12 See the February 22, 2011 submission to the Federal Reserve by Constantine Cannon on behalf of the Merchant Payments Coalition at p. 1. We also note that to the extent the merchants believe the increases in PIN debit interchange fees were the result of what they claim were MasterCard and Visa’s actions in leveraging power in the credit card market into the debit card market, they had the opportunity to seek redress in the settlements of the class action litigation that they negotiated with MasterCard and Visa. 13 See James C. Miller, “Addressing the Debit-Card Industry’s Market Failure,” February 2001, appended to the February 22, 2011 submission to the Federal Reserve by the Retail Industry Leaders Association, at p. 3 (“Miller Report”). 7 of 31 Merchants have complained about these fees on numerous occasions during this period and have even brought antitrust lawsuits against the card systems. Yet neither antitrust authority has ever concluded that setting interchange fees was unlawful price fixing or a monopolistic practice. Under current U.S. case law, interchange fees are not considered to be a violation of the antitrust laws against price fixing or monopolistic practices and in fact have been found to be lawful and necessary. Visa was sued in the 1980s for engaging in price fixing in establishing an interchange fee. The Eleventh Circuit Court of Appeals affirmed a lower court ruling that these fees were reasonable and essential for a payment card system.14 The Court found that “[a]n abundance of evidence was submitted from which the district court plausibly and logically could conclude that the [interchange fee] on balance is procompetitive because it was necessary to achieve stability and thus ensure the one element vital to the survival of the VISA system— universality of acceptance.”15 Other courts have reviewed and reached similar decisions rejecting antitrust claims regarding interchange fees.16 Merchants are trying to get the U.S. courts to reach a different decision, as is their right. Various groups of merchants filed antitrust lawsuits against MasterCard and Visa, and these lawsuits, most of which were consolidated into a single proceeding in 2005, remain pending. At this point in time, however, no court has ruled on any substantive aspect of the merchants’ price fixing claims. 14 National Bancard Corp. (NaBanco) v. Visa U.S.A., Inc., 779 F.2d 592 (11th Cir. 1986) (“NaBanco v. Visa U.S.A., Inc.”). 15 NaBanco v. Visa U.S.A., Inc., 779 F.2d 592, 605. 16 See Reyn’s Pasta Bella v. Visa U.S.A., 259 F. Supp. 2d 992 (N.D. Cal. 2003) and Kendall v. Visa U.S.A. Inc., Slip. Op., 2005 WL 2216941 (N.D. Cal. 2005). 8 of 31 The U.S. Department of Justice, a research report by Federal Reserve Board economic staff, and the General Accountability Office of the U.S. Congress have all examined the desirability of interchange fee regulation and, despite knowing the market structure of this industry and how payment systems set interchange fees, have all cautioned against regulation. The Federal Reserve Board is the primary regulator focused on payments and payment systems in this country, and has extensive experience overseeing Federal Reserve Bank payments services. It has also been aware that the payment card networks set interchange fees. The Board has not advocated regulation of these fees. The Federal Reserve Board staff released a detailed report on interchange fees in May 2009.17 While the staff acknowledged that market-set interchange fees might not maximize economic efficiency, the report explained that it was uncertain whether interchange fees were set higher than they should be and that regulation of these fees was subject to a number of practical problems.18 The Federal Reserve Board staff research report strongly rejected cost-based regulation. The GAO was directed under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (“CARD Act”) to conduct a study of credit card interchange fees and was also asked by members of the Senate Small Business Committee to review the market for interchange fees.19 The GAO found that proposals to regulate credit card interchange fees would have uncertain effects on consumers, as the extent to which merchants would pass on cost savings was uncertain, cardholder fees could increase, and it would be very difficult to 17 Prager et al. 18 Ibid. 19 The GAO did not address debit card interchange fees. However, many of its conclusions are relevant to debit as well as credit card interchange fees. 9 of 31 determine the optimal level of interchange fees that effectively balances the costs and benefits among the networks, issuers, merchants, and consumers.20 During the congressional debate over credit card interchange fees, the U.S. Department of Justice was asked for its views regarding proposed legislation that would have provided antitrust immunity to merchants to form a buyer cartel to negotiate interchange fees with MasterCard and Visa.21 The Justice Department concluded “[C]redit card networks forced by regulation to collect less from merchants may well respond by charging more to cardholders in fees, or reducing card rewards programs and other features that are attractive to consumers.” It noted that, “Notwithstanding the best of intentions and goals, the regulator will be imperfect in its attempt to replicate the terms that would be reached in a free market.”22 The merchants disagree with the conclusions of the U.S. Department of Justice, the Federal Reserve Board staff research report, and Government Accountability Office. They are pursuing a private antitrust case against MasterCard and Visa. The arguments they have made in favor of the Durbin Amendment echo their claims in this private litigation. But, as noted above, no federal antitrust authority or court has to date agreed with their claims that MasterCard and Visa are engaging in anticompetitive behavior in establishing interchange fees. B. The Role of Interchange Fees in Payment Systems Payment systems must have rules in place concerning what happens when a consumer that has been issued a card by a bank pays a merchant that has agreed to accept a card. The merchant has to know how much it is getting when the consumer pays with the card and the 20 See GAO 2009, at pp. 44-46. 21 See the DOJ June 2008 Letter. 22 Ibid. 10 of 31 bank that issued the card has to know how much it needs to pay to the merchant. The merchant that takes the card and the bank that issued the card also have to know what happens if, for example, there is fraud or the consumer disputes the charge. Some of the merchant trade associations have argued that the payment systems should have an interchange fee of zero, which would require banks to pay the merchant 100 cents on the dollar. Other proponents of regulation have argued that the interchange fee should be set at a level that reimburses the bank for some of its costs. Regardless, though, it is necessary for payments systems to “fix” some interchange fee, whether it is zero or some other amount. It is not practical to have a system in which the many banks that issue cards negotiate individually with the many merchants that accept cards. That is what the Eleventh Circuit concluded in 1986 when it found that interchange fees were lawful and necessary for the survival of the four-party payment system. All four-party payment systems set interchange fees. In doing so, these payment systems face a number of competing economic factors. Higher interchange fees encourage more banks to issue cards on their system. These higher fees encourage banks to pro