Debt has been the buzzword of the past year, in large part because of its direct role in triggering the financial crisis. One of the primary instruments of debt for most Americans is the credit card. Much of today's discussions of regulations have thus turned to policies surrounding credit cards. One of the recent debates has centered on whether the fees levied by credit card companies on retailers that accept their cards should be reduced. Currently, the "swipe fee" charge levied upon retailers amounts to between 1.5 and 2 % of the price of most purchases. In relation to the world's other wealthy countries this is a relatively steep price.

In recent months several chains and convenience stores have petitioned Congress to do something about these high fees. They have argued that they not only constrain their profits but also have a negative impact on consumers. This is because these stores are forced to pass these charges onto both those consumers who use cards as well as those who pay in cash. It does seem unfair that even those who don't use credit cards are forced to pay a premium for goods in order to subsidize fees levied by the card companies. In this sense it would make sense for the government to impose some kind of cap or restriction on how much credit card companies can charge in the form of "swipe fees". However, a closer look at the specifics of such legislation reveals that any such changes would be unlikely to actually benefit the consumer.

Any regulation of "swipe fees" would likely simply transfer the economic burden from retailers to credit card companies, without much of a benefit reaching the consumer. There are several examples from around the world of regulation of these fees not having a direct benefit to the consumer. Shifting the financial burden from the retailers to the card companies will simply cause the card companies to adjust their pricing schemes to reflect this change. This would mean that the pricing strategies of the retailers and card companies would change to reflect this new reality. Hence while the "swipe-fee" would no longer be levied in the form of higher prices for goods, consumers would simply pay this fee to the card companies themselves in the form of different pricing schemes and costs for their specific policies.

Thus Congress should be weary of the actual impact of any such legislation. It may appear appealing to cut down card companies' ability to levy fees upon retailers who are then forced to pass this burden onto consumers. However, such regulation is not likely the best means of benefiting consumers or addressing America's growing problem of individual debt.