Do you prefer to use credit or debit cards rather than write checks? If so, you should know that the federal government is taking steps that could mean you’ll be paying an increased or new annual fee for that card.

“Plastic” forms of payment are incredibly useful, but there are costs associated with them, including the expenses of issuing the cards and maintaining accounts. To pay for these expenses, banks charge merchants a small fee when they accept debit or credit cards. (The fee is smaller when debit cards are involved, larger when credit cards are involved.) Some merchants, such as Walgreens, have complained to friends in high places, resulting in a new federal law governing debit card transactions. The Federal Reserve System, given the task of creating regulations to implement the law, has gone even further than the misguided actions of Congress. The Minnesota Free Market Institute, along with several other organizations, has formally issued comments on the proposed regulations. You can read the comments on the Fed’s website (PDF).

There are costs associated with debit cards. The identity of the parties that pay for the costs–merchants or banks–is one that should be determined by the free interaction of many businesses in the economy, plus of course consumers. Instead, the federal government is stepping into an ordinary business dispute and picking sides. Only a government that is big enough to step into such a dispute will invite the lobbying of the sort that Walgreens and others have used to enlist government as their special agents.