Intense competition is the hallmark of America’s retail industry. Competition drives innovation and brings consumers lower prices and great products and services. The convergence of retail and technology means that the retail business model has fundamentally changed resulting in a business imperative to meet the desires of highly empowered consumers who have many choices for how and where to shop.
Unfortunately, in today’s digital age certain companies are impeding free market competition and deliberately deceiving customers. RILA believes a new approach is needed to ensure that access to information empowers consumers, rather than manipulates them, as they navigate the 21st century economy. Policymakers have a responsibility to protect consumers by ensuring that competition exists throughout the retail ecosystem, and RILA stands ready to assist policymakers as they determine what rules will work best in today’s digital world.
The connection between retailers and their customers is not always direct. Payment processing, internet access, search, and for some, online marketplaces, are examples of economic essentials that are controlled by third party entities. Many of these entities operate with far less competition than retailers. The absence of robust competition in these adjacent industries presents serious risks to retailers in the form of higher costs and disruptions to the overall customer experience.
RILA is working with the Federal Trade Commission (FTC), Congress and the judiciary as they continue to examine how large technological and financial platform firms use their power to stifle competition and harm consumers and the public more broadly.
RILA is encouraging policymakers to update the competition rulebook to better reflect how technology impacts the consumer experience. Specifically, RILA believes that:
- Price is no longer the only factor worthy of anticompetitive scrutiny;
- ISPs and dominant tech platforms are information bottlenecks with the power to skew markets and shape consumer behavior in ways that circumvent traditional price competition; and
- Dominant tech platforms are using their technology to erode product quality and the customer experience.
RILA believes that strong competition in industries connected to retail will benefit consumers and allow retailers to thrive. RILA urges policymakers to scrutinize these practices closely and act to strengthen a healthy and competitive marketplace.
Reforming The Payments Ecosystem
Merchants in the United States pay some of the highest interchange rates, or “swipe fees,” in the world. These fees are a significant line item for merchants – often the second largest expense after labor. Global card companies, along with major issuers, establish these rates in an anticompetitive manner that harms retailers and customers. The retail community is seeking reforms that increase transparency and competition through legislative and legal action.
RILA is working with the Federal Reserve and FTC to ensure merchants’ right to route transactions across an option of networks is protected under federal law. With debit swipe fee reform upheld in the “Financial CHOICE Act,” RILA is working with members of both parties to develop a pathway for legislation aimed at bringing competition to the credit card market.