A new paper from the Boston Fed investigates the transfers that occur as a result of credit card interchange fees:

On average, each cash-using household pays $151 to card-using households and each card-using household receives $1,482 from cash users every year. Because credit card spending and rewards are positively correlated with household income, the payment instrument transfer also induces a regressive transfer from low-income to high-income households in general. On average, and after accounting for rewards paid to households by banks, the lowest-income household ($20,000 or less annually) pays $23 and the highest-income household ($150,000 or more annually) receives $756 every year.

I’ve only read the abstract, so I can’t vouch for quality, but the headline numbers are interesting. It’s important to remember that the interchange fees pay for the existence of the entire system, and so there are many benefits that must be weighed against those costs. The availability of short term revolving credit may be much more valuable to low-income households such that the net costs and benefits are not actually regressive.

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