Priceless? The Social Costs of Credit Card Merchant Restraints
Aneace Haddad blogs about Adam Levitin's new paper titled "Priceless? The Social Costs of Credit Card Merchant Restraints".
From the abstract: "Who pays for credit card rewards? This article demonstrates that credit card rewards programs are funded in part by a highly regressive, sub rosa subsidization of affluent credit consumers by poor cash consumers. In its worst form, food stamp recipients are subsidizing frequent flier miles. The subsidization is created by a set of credit card network rules called “merchant restraints” that combines with a cognitive bias known as the framing effect to limit merchants' ability to price payments systems according to cost."
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