With all the attention being paid to the soaring cost of gasoline, there’s one price component that could easily be lowered that hasn’t gotten a lot of attention: interchange. Americans pay about 10 cents/gallon or $2/tank (20 gallon) in interchange fees. Compare this with the estimated benefit of drilling in ANWAR–3.5 cents per gallon by 2027. Tremendous political energy that has been spent over drilling in ANWAR. If we’re really interested in reducing gasoline prices, then reforming the interchange fee system presents an option of immediate savings that would far outstrip ANWAR. Of course, the maximum savings would be less than from a federal gas tax (18.4 cents/gallon), but a gas tax holiday isn’t permanent. (I’m putting aside the question of whether we should want pricing that encourages fossil fuel consumption.)
Fortunately, the good folks at Visa are looking out for the American consumer. And out of concern for American drivers, Visa has adjusted its interchange rate schedule. Unfortunately, there’s more than meets the eye to Visa’s apparent benevolence and desire to “Help Ease Pain at the Pump.” The devil, of course, like so many things in the card industry, is in the details.