A Better Idea Than Paying $5/Month for a Debit Card: Cash Discounts at Checkout
October 18th, 2011 by Al Lewis (alewis)The first return-to-our-roots policy idea is “Pay Cash - Save Cash.” By way of background, if you’ve been following the news (or reading your bank statements) you know that banks are going to be collecting monthly debit card fees from customers instead of charging retailers a “haircut.”
This “haircut” was a nuisance fee that most retailers didn’t mind paying, just like they accept credit cards and don’t mind paying the fee. However, a few Congresspeople (mostly Democrats but the Republicans don’t get any points on this one either since they went along with it) got incensed about this and legislated an end to it. The banks, deprived of their usual fee from retailers, are compensating by charging consumers, who for the most part are livid. It’s hard to imagine $5 causing such distress in any other circumstance. It’s because this $5 fee is totally due to Congress not thinking before they act and solving a fairly minimal problem by creating a much bigger one.
Solution: repeal this law, about the dumbest idea since Prohibition other than WIN Buttons, and replace it with a very simple rule that allows banks to charge the haircut, but allows retailers to charge less to people who pay cash.
Instead of paying a $5 monthly fee, consumers get lower prices. Retailers are no worse off than they were before this all started, and banks can get their money, only now that we consumers know debit cards aren’t “free” to use at checkout, we might use them less and pay cash (and save cash) more. I know I will.
Tags: $5/month fee for debit cards, bank fees, debit card haircuts, debit care fees, point-of-sale fees