Zywicki Paper Cited in New York Times Article

A New York Times article on a federal judge’s ruling against American Express cites "Price Controls on Payment Card Interchange Fees: The U.S. Experience," a study co-authored by Professor Todd J. Zywicki.


Not only are retail prices likely to remain at current levels, but card companies like American Express, Visa and MasterCard may also end up raising their annual fees and lending rates because they will need to make up revenue lost from the merchant fees in order to pay for the myriad rewards programs they have created.

The evidence for such a pattern is well established: In 2010, Senator Richard J. Durbin, Democrat of Illinois, introduced the Durbin Amendment as part of the Dodd-Frank overhaul of the financial system. The amendment was meant to lower merchant fees for processing debit cards; retailers like Walmart and Home Depot argued that the banks were gouging them, pushing prices up for consumers.

So what happened after the legislation was put into effect?

“Most large retailers have seen significant cost reductions as a result of the Durbin Amendment, yet to date there is no evidence that those cost savings have been passed through to consumers,” a study by the George Mason University School of Law said. Other academic research has come to the same conclusion.

Amex’s Loss in Court May Not Help Consumers, New York Times, February 23, 2015. By Andrew Ross Sorkin.

Read the article