^®: CRE Regulatory Action of the Week

Reducing Payment Card Transaction Costs
A just released for comment Working Draft CRE white paper discusses how smaller retailers can immediately take steps to reduce their payment card transaction costs. The paper also details why regulation of payment card processing costs would not help consumers.

In determining that regulation would harm consumers, the CRE analyzed the economics of the payment card market based on papers from the Congressional Research Service, the US Delegation to the OECD's Competition Committee, academic journals and industry research organizations. CRE also closely examined testimony and materials from leading trade associations.

CRE determined that negotiated-rate card processing programs, also known as merchant credit card processing programs, allow smaller business to leverage one of their greatest strengths, their combined purchasing capability. By pooling their transactions, smaller retailers are able to take advantage of the economies and scale, and the negotiating leverage with card processors, enjoyed by larger retailers.

CRE recommends that the Merchants Payments Coalition establish a structured negotiating process to provide a forum allowing their members to negotiate lower transaction costs with payments card processors.

CRE welcomes comments on the Working Draft paper at comments@thecre.com.