This is the Cato Daily Podcast for Monday, June 12, 2017.

I'm Caleb Brown.

Fees paid by merchants to accept credit cards represent a vital source of revenues

for credit card companies and provide a great deal of

convenience, frequent flyer miles and other freebies for consumers.

So what's happened since those fees have been limited by the so-called Durbin Amendment.

Heato's Thea Brook Knight explains the issue.

I used to be able to earn frequent flyer miles

on a debit card, because I don't use credit cards.

Anybody can email me directly if they care about why.

Why does Dick Durbin not want me to be able to do that?

Well, I think to understand this, we need to get into some of the mechanics

of how payment cards work and by payment cards

I mean debit cards, credit cards, something you have that you swipe or now insert

when you're trying to buy something.

And so to get into this, if you think about it,

when you have a debit card, or if you have a credit card where you pay off the balance,

if you've ever credit card where you pay off the balance, have you ever thought about why somebody

would offer you that card?

I mean, we understand with a credit card, you buy something and you don't pay it off and you're

paying, you know, 18, 20 something percent whatever we understand how

company how the credit card makes money on that but how do they make money if you

...