Monday, April 17, 2006

Retailers continue demand for lower price

In the slipstream of the EU Commission, Dutch retailer Dirk van der Broek desires (in the Financieele Dagblad) that fees for credit-card payments should be halved in the Netherlands. This is quite a cheap publicity stunt. In the Netherlands we only have 50 million credit-card statements, mostly in sectors that deal with tourists (compared to 1,3 billion debit-card pos-payments).

If any merchant wishes to pass on the high-cost of credit-card payment to the consumer, he or she is free to do so (it is now 10 years since the non-discrimination rule was abolished). Besides, we are now heading for a Dutch future in which the cost of a payment is reflected more and more in its price. So there's no harm done if consumers are confronted with the price of the credit-card payment. This has the benefit that the user chooses payment instruments on the basis of a transparent insight in cost/price.

But Mr van der Broek apparently wishes to apply the Australian model: regulators diminish the merchant fees for credit-cards, retailers thus earn money, but do not pass it on to consumers. I find that a bit too much of a short-sighted approach. Then again, with the retailer wars that are now going on, it is an understandable retailr reaction.