Joshua Gans directs my attention toward this symposium, led by Geoffrey Manne.  Here is an excerpt from Manne's summary statement:

…theory and empirical evidence suggest that lowering interchange fees does nothing to help consumers, and in fact harms them by raising annual fees and thus again by limiting competition among cards at the point of sale.  Perhaps there is some policy reason why we would want to help merchants at the expense of consumers, but the issue, often framed as merchants and consumers against banks and card networks, really seems to be merchants against consumers.  At best, we have no idea what the full social implications of capping interchange fees would be–but there is still a conflict between merchant and consumer interests, and we should be wary.

Here is Joshua Gans's post on the importance of the "no surcharge rule":

The better rule to subvert would be the ‘no surcharge rule’ that prevents merchants from offering different prices to consumers based on payment instrument. That rule was abandoned in Australia and we see many instances where it bites. In that situation, the strong theoretical prediction is that what fees Visa uses to extract payments from merchants do not matter for overall efficiency; even if they do matter for prices. This is one of those cases where there are relatively simple regulatory interventions to try that could have a big effect.

I am not endorsing all of these materials but simply offering them up for evidence that a moral condemnation of Visa is an overly hasty response.

Everyone is blogging about it, here is the link.  Kevin Drum has one good summary, or here is Yves Smith or Felix Salmon, both of whom are upset.  The upshot is that the supermarket pays Visa a fee if you use a "sign for it" card rather than entering a PIN number for a debit card, though it's a little more complicated than that.

My practice does not match the setting of the article exactly, but here's how it goes.  As Natasha forced me to internalize years ago, when I use my Visa credit card, and sign for payment, I receive frequent flyer miles.  When I use my Visa BB&T debit card (yes, my two main payment cards are both Visa), I don't get anything back.  By using the credit card, resources are redistributed away from the store and to both Visa and me.  On net that's a better deal for me and that's why I end up signing so often.  This could be efficient too, in a constrained second best sense.  For one thing, it indicates the supermarket was earning ex ante monopoly profit; is it so tragic for some of that profit to be split by Visa and me?  One way to understand Visa is that it is supplying countervailing power by "organizing" consumers against the retail monopoly and distributing the gains from the new bilateral monopoly arrangement.

There's nothing to stop the store from offering me frequent flyer miles, or other forms of discount, if I use a means of payment which they prefer.  I've yet to see a deal good enough to make me switch.  (When Sears pushes this on me, I just say no because Visa offers me a better deal.)  And I find it easy enough to believe that the petty monopoly of the local grocer is more significant than the market power in the potentially more contestable cards and payment market.

Again, I don't know how much of the entire market works on the basis that I experience.  But it's one simple example of how "higher fees" can be good rather than bad. 

Not long ago Ronald Coase turned 99 years old and I am delighted to see he is still alive.  His ideas are still alive too.

Addendum: When issues of this sort arise, there is a common pattern in blogospheric discussion: Blogger A criticizes a market practice with tones of absolute condemnation.  Blogger C (in this case, me!) responds with a plausible scenario, and a microeconomics-consistent first-order explanation, that things aren't so bad after all.  Blogger D tries to defend Blogger A by shifting the burden of proof to Blogger C to demonstrate that markets are efficient in such a case and by leveling charges of market fundamentalism and by citing some second or third best arguments that the market can fail after all.  Don't be fooled by that polemic slide in emphasis; the burden of proof is on the critics here — those asserting the existence of an evil and asking us to move beyond a loose agnosticism – not on me.

Strategic default on mortgages will grow substantially over the next
year, among prime borrowers, and become identified as a serious
problem. The sense that ‘everyone is doing it’ is already growing, and
will continue to grow, to the detriment of mortgage holders. It will
grow because of a building backlash against the financial sector,
growing populist rhetoric and a declining sense of community with the
business world. Some people will take another look at their mortgage
contract, and note that nowhere did they swear on the bible that they
would repay.

From the WSJ's Real Time Economics.

Jung, a slight 39-year-old with an undertaker's blue suit and a
preacher's demeanor, is a resolute counselor on the ever-after who
welcomes clients with the invitation, "OK, today let's get close to
death."

Jung runs a seminar called the Coffin Academy, where,
for $25 each, South Koreans can get a glimpse into the abyss. Over four
hours, groups of a dozen or more tearfully write their letters of
goodbye and tombstone epitaphs. Finally, they attend their own funerals
and try the coffin on for size.

In a candle-lighted chapel, each
climbs into one of the austere wooden caskets laid side by side on the
floor. Lying face up, their arms crossed over their chests, they close
their eyes. And there they rest, for 10 excruciating minutes.

"It's
a way to let go of certain things," says Jung, a former insurance
company lecturer. "Afterward, you feel refreshed. You're ready to start
your life all over again, this time with a clean slate."

Across
South Korea, a few entrepreneurs are conducting controversial forums
designed to teach clients how to better appreciate life by simulating
death. Equal parts Vincent Price and Dale Carnegie, they use mortality
as a personal motivator for a variety of behaviors, from a healthier
attitude toward work to getting along with family members.

Many
firms here see the sessions as an inventive way to stimulate
productivity. The Kyobo insurance company, for example, has required
all 4,000 of its employees to attend fake funerals like those offered
by Jung.

The full article is here and I thank Kaylin Wainwright and Daniel Lippman for the pointers.  Here is an earlier MR post on how contemplating mortality changes your behavior.

The estimated social pressure cost of saying no to a solicitor is $3.5 for an in-state charity and $1.4 for an out-of-state charity. Our welfare calculations suggest that our door-to-door fund-raising campaigns on average lower utility of the potential donors.

That's from Stefano DellaVigna, John List, and Ulrike Malmendier.  You'll find an ungated copy here.