“… Visa has stated publicly that swipe fees are ‘not a cost-based calculation, but a value-based calculation.’ Banks and networks argue that the higher cost reflects the considerable “value” merchants derive from being able to accept debit cards.
“According to data from the Federal Reserve, this explains why merchants pay on average 44 cents on a transaction that costs just 4 cents to process. Well, water is arguably one of the most valuable things on Earth; it is essential to life. Why is it not priced as such? Because competition and access to alternatives ensures that water is affordable to all. The debit market’s failure in this regard is another clear example of poor marketplace health.
“So when reforms were proposed, considered, and passed into law a year ago, I was neither surprised nor displeased. Quite the contrary. The intervention was government doing exactly what it should do to protect free enterprise; fix broken markets. What is remarkable is that it took so long to happen. A cursory look at the market is all that’s needed to realize something is wrong and needs to be fixed.”
http://thehill.com/blogs/congress-blog/economy-a-budget/164643-the-debit-swipe-fee-market-is-broken’