Consumers, retailers near victory over dirty banks

For years, the dirty banks have skimmed a few percent off every retail credit card transaction. Laws forced retailers to charge the same price whether the consumer used cash or credit. The banks used rewards cards to push consumers to choose credit so that the banks could collect their 3% fee for providing essentially zero value.

That may be about to change. The Senate just passed an amendment by Sen. Durbin:

The measure from Durbin, the No. 2 Democrat in the Senate, would let merchants give discounts to customers who use one type of card over another, or who pay by cash or some means other than by card. It would also allow retailers to set minimum purchase levels for using a card.

And it would let the Federal Reserve make the card networks set debit card transaction fees that are "reasonable and proportional to the actual cost incurred."

A side effect of the dirty banks' credit card racket has been an increase in excessive spending and consumption, as studies show that consumers spend more loosely with plastic than with cash. If this is the first crack in the dam of excess consumption, that's a very good thing.