Minor Thoughts from me to you

I'm chortling madly over here. Why? Because the law of unintended consequences strikes again. Because people who ignored Bastiat's dicta regarding the "seen and the unseen" are being bitten, hard, by reality. Because federal regulators (hi Senator Durbin!) are once again proving to be powerless. People are not just pieces to be moved around a chess board by wise overseers. They make their own decisions and you can't predict what the ultimate effect of regulations will be.

Many business owners who sell low-priced goods like coffee and candy bars now are paying higher rates—not lower—when their customers use debit cards for transactions that are less than roughly $10.

That is because credit-card companies used to give merchants discounts on debit-card fees they pay on small transactions. But the Dodd-Frank Act placed an overall cap on the fees, and the banking industry has responded by eliminating the discounts.

"There will be some unhappy parties, as there always is when the government gets in the way of the free-market system," says Chris McWilton, president of U.S. markets for MasterCard Inc. He said the company decided that it couldn't sustain the discounts under the new rate model because the old rates had essentially subsidized the small-ticket discounts.

And, the kicker.

Mr. Scherr, the coffee shop owner, says that debit-card fees at one of his five stores rose to about 4.5% of sales from 3.5% of sales in the month after the new law took effect. "It's a killer for me," says Mr. Scherr, who estimates that 95% of his sales are under $15.

In the meantime, Mr. Scherr is weighing whether the expense of an ATM would justify its installation. If he gets one, he says he plans to "stick a sign on top of it, calling it a 'Durbin ATM.'"

I didn't expect that level of pushback from a Manhattan coffee shop owner. Good for him—I hope he does it.

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