Interchange - A Zero Sum Game?

Haddad comments

The story has got to change. You can’t simply say the same thing over and over again, louder and louder, keeping your ears closed so as not to hear customer complaints (yes, merchants are customers, they are paying interchange fees, so their complaints need to be heard) and hoping that this time merchants will finally hear and understand that they should simply accept the fees without complaining.

Unfortunately, this is a zero sum game. Because card issuers have dominated card association decision making for years, interchange increases - rationalized by surveys showing increased issuer costs - have resulted.

Some, however, like to ask what the merchants are complaining about. That argument goes like this. Merchants benefit from the credit facility provided by credit cards. Their sales are greater because consumers have easy access to credit to buy now and pay later. Card issuers have credit losses when some of their cardholders simply don't pay their bills. If you compare the numbers - credit losses in the 4-5 percent range to interchange fees in the 2-3 percent range, you might argue that merchants are getting the benefits of those higher sales while issuers suffer those losses.

Fair bargain?