The National Retail Federation (NRF) is in town, which means it’s time to brace yourself for the K Street equivalent of a brazen heist.
It’s difficult to think of another industry that has been as shameless as the retailers in trying to get Congress to intervene in routine negotiations with a vendor, in this case the credit card companies that process their payments.
Does Apple swarm Capitol Hill demanding federal price controls on silicon chips? Does the trucking sector employ an army of lobbyists to regulate the price of tires? Of course not.
Those examples seem ridiculous, but you have to hand it to NRF: somehow we’ve come to accept that processing credit card payments is a special transaction subject to special rules set by the government, despite ample competition in the payment market including dozens of tech startups that promise to revolutionize how we buy things.
It’s enough that you might even be tempted to grant their lobbyists grudging admiration – if it weren’t for the fact that they’re always back at the trough, hungry for even more.
Promotional materials for the NRF’s annual fly-in show the group is launching a major new effort to secure even more restrictive government price controls this year.
The group describes their “efforts to rein in ever escalating credit and debit card interchange fees (‘swipe fees’).” News flash: the government sets the price now, so it’s a hard sell to argue there’s runaway gouging going on.
The new push comes despite the fact that the NRF’s talking points on this issue have lost practically all of their credibility in the last year. Back when Sen. Dick Durbin (D-IL), was orchestrating the original shakedown in 2010, the retailers vowed that consumers would reap the benefits of reducing the swipe fees.
You’re probably not that surprised to learn that retail stores, rather than lower prices that consumers were used to, simply pocketed the extra cash.
A meticulous study of the matter in Economic Quarterly found that in the wake of the price controls, “very few merchants (1.2 percent) reduced prices, while a sizable fraction of merchants (21.6 percent) increased prices.”
Revenues for the credit card companies, banks, and credit unions, meanwhile, took a pretty big haircut for essentially zero benefit to the people it was supposed to help.
At some point, it’s time to say enough is enough. Using Congress to set prices is not how we do things in America. The NRF’s annual fly-in cannot become the retail sector’s new Black Friday.