---
title: "A Genuine Commercial Justification for Interchange Fees"
author: "Berg, C.; Davidson, S.; Potts, J."
date: "2018-03-17"
url: "https://chrisberg.org/2018/03/a-genuine-commercial-justification-for-interchange-fees/"
type: "Working papers"
published_in: "Working paper, SSRN"
doi: "10.2139/ssrn.3142944"
topics: "Competition policy, Money and banking"
---

# A Genuine Commercial Justification for Interchange Fees

*With Sinclair Davidson and Jason Potts*

**Abstract: **Ronald Coase famously argued that “if an economist finds something – a business practice of one sort or other – that he does not understand, he looks for a monopoly explanation”. So it is with credit card interchange fees. Intellectual confusion has led to the phenomenon of interchange fees being misdiagnosed as being a monopoly problem leading to inappropriate policy intervention. Following George Stigler’s path breaking analysis of the US Security and Exchange Commission he claimed that financial regulation was “founded upon prejudice and … reforms are directed by wishfulness”. In our opinion, Australian regulatory attitudes towards interchange fees should be placed into the same category: reforms initiated by ignorance and anti-bank prejudice.

[Working paper available on SSRN](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3142944)